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2006-2293, 2006-2389, and 2006-2390. Elyria v. Lorain Cty. Budget Comm., Slip Opinion No. 2008-Ohio-940.
Board of Tax Appeals, Nos. 2003-T-1533, 2004-T-1166, and 2005-T-1301. Decisions reversed and causes remanded.
Moyer, C.J., and Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, and Cupp, JJ., concur.
Lanzinger, J., concurs in judgment only.
Opinion: http://www.supremecourtofohio.gov/rod/docs/pdf/0/2008/2008-Ohio-940.pdf
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(March 12, 2008) In a case challenging a county budget commission’s allocation of state tax revenues among local communities, the Supreme Court of Ohio held 7-0 today that:
(1) When one or more local political subdivisions wish to appeal their county’s allocation of state tax revenues for a given tax year, they must follow appeal procedures set forth in R.C. 5747.55 regardless of whether the challenged allocation was based on the standard statutory formula or an “alternative” formula developed by the county.
(2) An appeal to the State Board of Tax Appeals (BTA) from an apportionment by a county budget commission must strictly comply with R.C. 5747.55(C)(3), which includes a requirement that the notice of appeal must identify each specific political subdivision that the appellant believes has received an over-allocation in the challenged formula.
The Lorain County municipalities of Elyria, North Ridgeville and Avon Lake and an unincorporated township within the county filed complaints with the BTA alleging that the Lorain County Budget Commission had misallocated the county’s share of state tax revenues from the Undivided Local Government Fund (ULGF) and Undivided Local Government Revenue Assistance Fund (ULGRAF) for the 2004 through 2006 tax years. The complainants alleged that the budget commission had unlawfully reduced their respective shares of ULGF and ULGRAF funds for the disputed tax years in order to implement a settlement between the budget commission and the city of Lorain that increased Lorain’s percentage share of the county’s ULGF and ULGFRAF funding beginning in 2003.
After an evidentiary hearing had been held before the BTA, Lorain filed a motion to dismiss the complainants’ appeals on the basis that the notices of appeal they had filed with the board were defective because they did not comply with the requirement in R.C. 5747.55(C)(3) that an appeal must set forth the name of each political subdivision the appellant believes has been overallocated and the amount of the alleged overallocation. The BTA subsequently granted the motion to dismiss, ruling that it did not have jurisdiction to hear the complainants’ appeals because their petitions for relief had identified only Lorain County, and not the city of Lorain, as a party receiving an excessive allocation of the county’s ULGF and ULGRAF funds.
Elyria and the other complainants exercised their right to appeal the BTA’s ruling to the Supreme Court. They argued that the BTA’s dismissal of their claims should be reversed because the procedural requirements cited in the BTA’s ruling applied only to appeals challenging a budget commission’s allocation under the statutory formula prescribed by the legislature, whereas the allocation at issue in this case was made under an “alternative” formula adopted by Lorain County and thus was not subject to the requirements of RC. 5747.55(C)(3). They also argued that, even if R.C. 5747.55(C)(3) did apply to their appeals, they had “substantially complied” with its requirements by specifying the amounts they believed had been underallocated to them and the increased amounts awarded to Lorain for each tax year.
Writing for the Court in today’s decision, Justice Paul E. Pfeifer affirmed the BTA’s holdings that the appeal process set forth in R.C. 5747.55 applied to the complainants’ appeals, and that the appellants were required to strictly comply with the procedural requirements of R.C. 5747.55(C)(3). He went on, however, to reject the board’s finding that it lacked jurisdiction to consider the municipalities’ appeals and remanded the cases to the BTA for further proceedings.
“The BTA dismissed the case because it found that Elyria should have named Lorain City as an overallocated subdivision,” wrote Justice Pfeifer. “That finding was predicated on the BTA’s view that a litigant in Elyria’s position could assert only two types of claim before the BTA. Elyria could establish either ‘that the allocation should have been made under the old formula,’ pursuant to which claim Elyria should have identified Lorain City as an overallocated subdivision, or that neither the current nor the former alternative formula applies, in which case, allocation would have to occur pursuant to the statutory method. Because Elyria requested ‘something different,’ i.e. a variation on the former alternative method, not statutory apportionment, the BTA barred its appeal ... ”
“Elyria’s theory of relief in paragraph 4(c) of the respective notices of appeal relies on R.C. 5747.55(D), which states that ‘no change shall, in any amount, be made in the amount allocated to participating subdivisions not appellees’ in a BTA appeal. In effect, the notices of appeal to the BTA argue that the alternative method contemplated by the settlement is binding on the subdivisions of the county, and that settlement involves a contractual increase to Lorain City financed completely by the county. The assertion of this internally coherent theory, even if it ultimately fails on the merits, distinguishes this case from Union Twp.(v. Butler County Budget Commission), 101 Ohio App.3d 212, 655 N.E.2d 260, upon which the BTA heavily relied in dismissing these appeals. ... We hold only that because Elyria’s notices of appeal to the BTA asserted a claim that justified naming the county as the only overallocated subdivision, the BTA had jurisdiction to determine the merits of that claim, and accordingly, the BTA committed legal error when it dismissed for want of jurisdiction.”
Justice Pfeifer’s opinion was joined by Chief Justice Thomas J. Moyer and Justices Evelyn Lundberg Stratton, Maureen O’Connor, Terrence O’Donnell and Robert R. Cupp. Justice Judith Ann Lanzinger concurred in judgment only.
Contacts
Terry S. Shilling, 440.322.1329, for the City of Elyria.
Gerald A. Innes, 440.323.3335, for the Lorain County Budget Commission.