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Vehicle, Fuel Tax Revenues May Not Be Used to Pay County's Liability Insurance Premiums 2005-0044. Knox Cty. Bd. of Commrs. v. Knox Cty. Engineer, 2006-Ohio-2576. (June 7, 2006) In a decision announced today, the Supreme Court of Ohio affirmed that Article XII of the state constitution restricts the expenditure of revenues derived from the registration, operation or use of vehicles on public highways, and revenues from motor vehicle fuel taxes, to the “highway purposes” listed in that section of the constitution, or purposes directly connected thereto. In applying that standard to a dispute between Knox County officials, the Court held by a 5-2 majority that motor vehicle and fuel tax revenues may not be used to reimburse a county for the percentage of its liability insurance premiums that were attributed to the County Engineer's office. The majority opinion was authored by Justice Terrence O'Donnell. In September 2002 and September 2003, the Knox County Commissioners sent invoices to the Knox County Engineer seeking payments totaling more than $46,000, representing the share of premiums the county had paid into a self-insurance pool over those two years that were attributable to the activities of the engineer's office. The only available revenues from which the engineer could pay the insurance assessments were monies the engineer had received from the state as part of Knox County's share of gasoline tax and motor vehicle registration revenues. The engineer's office refused to pay the self-insurance assessments. As the basis for those refusals, the engineer advised the commissioners that he was legally barred from expending state gasoline tax revenues or motor vehicle registration fees to cover administrative costs such as insurance premiums by Article XII, Section 5(a) of the Ohio Constitution, which explicitly restricts the use of those revenues to highway construction and maintenance and other narrowly defined “highway purposes.” The commissioners filed suit in Knox County Common Pleas Court. They obtained a declaratory judgment that the self-insurance expenses for which they sought reimbursement represented a “cost of operation” of the county engineer's office that could be paid for from gasoline and vehicle registration revenues under R.C. 315.12. The order also declared that the engineer was not prohibited from making such expenditures by Article XII, Section 5(a) of the state constitution. On review, the 5th District Court of Appeals affirmed the decision of the common pleas court. The County Engineer sought and was granted Supreme Court review of the lower court decisions. In today's decision, the Supreme Court reversed the 5th District, holding that the county commissioners had not demonstrated that the self-insurance premiums for which they sought reimbursement were directly connected to any of the “highway purposes” spelled out in the constitution. “In this case, the record before us contains no evidence that payment of the CORSA insurance premiums is for a highway purpose or is directly connected with construction, maintenance, and repair of the highways or the enforcement of traffic laws,” wrote Justice O'Donnell. “Thus, because the county engineer's budget has been funded from vehicle license and fuel taxes, and the expenditure of these funds is constitutionally restricted, the county engineer may expend these moneys only for the purposes listed in Section 5a, Article XII of the Constitution or purposes directly connected thereto.” While noting that R.C. 315.12(A) permits two-thirds of the cost of operation of the engineer's office to be paid from these restricted funds, Justice O'Donnell wrote that “(T)he record before us does not contain any evidence regarding whether the specific … insurance premiums at issue here are ‘directly connected' with highway purposes.” He suggested, however, that a different legal outcome in a similar case might be possible “if the record contained evidence that the (insurance) premiums pertained to highway purposes or were directly related thereto, or if the engineer's budget did not consist wholly of restricted funds.” The majority opinion was joined by Chief Justice Thomas J. Moyer and Justices Alice Robie Resnick, Maureen O'Connor and Judith Ann Lanzinger. Justices Paul E. Pfeifer and Evelyn Lundberg Stratton entered separate opinions concurring in part and dissenting in part from the majority's holding. The two also joined one another's opinions. Justice Pfeifer concurred with the majority holding that vehicle license fees and fuel taxes are restricted to the purposes stated in Article XII, Section 5 of the state constitution, but said he would hold that liability insurance qualifies as a “cost of operation of the office of county engineer” that counties are explicitly permitted to recoup from dedicated highway revenues under R.C. 315.12(A). Justice Stratton also concurred with the majority's syllabus holding, but wrote that “R.C. 315.12, our prior case law and common sense tell us that liability insurance premiums are ‘related to' the construction maintenance and repair of public highways,” and are therefore “other statutory highway purposes” for which dedicated highway revenue sources may be expended. Contacts Luther L. Liggett Jr., 614.227.2399, for the Knox County Engineer. Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions: http://www.supremecourtofohio.gov/ROD/newpdf/. 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