Gov. John Kasich on Friday vetoed a proposal to increase taxes on health insurers that would have sent money to counties and regional bus services – a decision Highland County Board of Commissioners President Shane Wilkin called “extremely disappointing.”

State lawmakers proposed an amendment to the budget making up for lost revenue from a sales tax that is being discontinued by the federal government on Medicaid managed care organizations.

Locally, the loss is estimated at $807,000 for Highland County.

But the Kasich administration said the governor on Friday vetoed the $207 million tax increase proposal because it would’ve risked losing a bigger chunk of money and created a $615 million loss for Medicaid.

“The governor’s veto is extremely disappointing, especially considering our budget is already stressed,” Wilkin told The Times-Gazette. “Covering the state shortfall with a fee while not addressing local governments’ loss will most likely require additional budget cuts.”

Highland County Auditor Bill Fawley, who has said that the possible loss of funds could prove to be “very serious” for the county’s budget next year, was cautiously optimistic about the House and Senate overriding the veto.

“I think they have enough votes to override,” Fawley said. “Here again, even if they override the veto, I’m not sure we’ll get the funds. That’s still going to be up to the federal government.”

Fawley expressed gratitude toward the senators and representatives who introduced and advocated for the amendment.

“I appreciate what the Senate and the House have done,” he said. “They knew pretty well going in the governor was going to veto it, but they put it in anyway. So I appreciate that.”

The governor’s administration said the proposed tax increase would have needed to be approved by the U.S. Department of Health and Human Services.

Kasich officials said all indications are that wouldn’t have happened and that by asking the federal government to approve the increase it could have come back and eliminated the entire tax.

“That would open up an additional hole,” Greg Moody, director of the Governor’s Office of Health Transformation, said on Saturday.

An email exchange obtained by The Associated Press between Moody and a former health and human services department official in the Obama administration said the department has never allowed a state to go above a 6 percent tax on health insurers as Ohio lawmakers were seeking.

Moody also said that current health secretary Tom Price has called for eliminating those kinds of taxes.

The new state budget, Moody said, does include one-time payments for counties to help them deal with the loss of tax money from Medicaid managed care organizations.

But county leaders maintain they will have to cut programs without funding from the vetoed tax on health insurers, the County Commissioners Association of Ohio said in a statement after Kasich’s decision.

“In the absence of a revenue replacement mechanism, counties will have to reduce or eliminate funding for programs that invest in economic growth and exacerbate the growing pressure on important systems like criminal justice, public safety, and child protection,” said Suzanne Dulaney, the group’s executive director.

It’s possible that lawmakers could try to override Kasich’s decision when they meet on Thursday for an expected attempt to override another one of Kasich’s vetoes on a proposed freeze of Medicaid expansion.

The Associated Press contributed to this report. David Wright can be reached at 937-402-2570, or on Twitter @DavidWrighter.