Case Title: Elyria v. Lorain Cty. Budget Comm.

Citation: 2011-Ohio-1482

Docket Number: 20100564

State: ohio

Court: Ohio Supreme Court

Date: 2011-04-05T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Elyria v. Lorain Cty. Budget Comm., Slip Opinion No. 2011-Ohio-1482.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2011-OHIO-1482 
CITY OF ELYRIA ET AL., APPELLANTS AND CROSS-APPELLEES, v. LORAIN 
COUNTY BUDGET COMMISSION ET AL., APPELLEES; COUNTY OF LORAIN, 
APPELLEE AND CROSS-APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Elyria v. Lorain Cty. Budget Comm.,  
Slip Opinion No. 2011-Ohio-1482.] 
Allocation of local government fund and local government assistance fund — R.C. 
5747.55(D) — BTA’s decision is reasonable and lawful — Decision 
affirmed. 
(No. 2010-0564 — Submitted January 19, 2011 — Decided April 5, 2011.) 
APPEAL from the Board of Tax Appeals, Nos. 2003-M-1533, 
2004-M-1166, and 2005-M-1301. 
__________________ 
O’DONNELL, J. 
{¶ 1} The cities of Elyria, Avon Lake, and North Ridgeville and the 
township of Amherst, appellants and cross-appellees here, again challenge 
appellee Lorain County Budget Commission’s apportionment of local government 
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funds for the distribution years 2004, 2005, and 2006.  In their first appeal, we 
reversed the BTA’s dismissal of their challenge for lack of jurisdiction and 
remanded for consideration of their case on the merits.  See Elyria v. Lorain Cty. 
Budget Comm., 117 Ohio St.3d 403, 2008-Ohio-940, 884 N.E.2d 553. 
{¶ 2} This appeal and cross-appeal arise from a decision of the BTA 
following our remand and present two issues: first, whether reduction of the 
allocation of local government funds to Elyria, Avon Lake, North Ridgeville, and 
Amherst Township pursuant to the new alternative method of apportionment 
adopted for 2004, 2005, and 2006 is lawful because it arose as part of the 
settlement of an appeal of the 2002 apportionment brought by the city of Lorain, 
when none of the political subdivisions here were parties to either that case or that 
settlement; and second, whether the BTA reasonably and lawfully disapproved of 
a special adjustment to the new alternative method of apportionment for 2004 
intended to reimburse the county for $250,000 of the $500,000 settlement 
payment it tendered to the city of Lorain to resolve the 2002 appeal. 
{¶ 3} Because the BTA acted reasonably and lawfully when it approved 
the new alternative method of apportionment formula for 2004, 2005, and 2006 
and when it found that the $250,000 special adjustment to the 2004 apportionment 
overallocated general revenue funds to Lorain County, we affirm the decision of 
the BTA. 
Facts and Procedural History 
{¶ 4} During the years at issue here, Ohio law provided for a portion of 
various state taxes to be placed in a local government fund and a local 
government revenue assistance fund, which the state distributed to county 
treasurers and credited to the Undivided Local Government Fund and the 
Undivided Local Government Revenue Assistance Fund of each county.  See R.C. 
5747. 03(A)(1) and former R.C. 5747.61(B), 143 Ohio Laws, Part II, 2331, 2630-
January Term, 2011 
3 
 
2632.  The county budget commission then apportioned these local government 
funds among the political subdivisions within the county. 
{¶ 5} The legislature provided that these funds be distributed either by a 
statutory method of apportionment pursuant to R.C. 5747.51 and former R.C. 
5747.62, 147 Ohio Laws, Part II, 3906, 3945-3947, or by an alternative method of 
apportionment pursuant to R.C. 5747.53 and former R.C. 5747.63, 149 Ohio 
Laws Part IV, 7881, 7887-7890, which involved adopting a formula for 
distribution of the funds to each subdivision. 
{¶ 6} From 1984 to 2003, the Lorain County Budget Commission 
applied an alternative method of distributing these funds to the political 
subdivisions in Lorain County. 
{¶ 7} In November 2002, however, a month after the budget commission 
had allocated local government funds for 2003 in accordance with the existing 
alternative method, the city of Lorain appealed its distribution to the BTA, 
contending that the budget commission had allocated funds to an ineligible entity 
and that the alternative method of apportionment had not been adopted in 
accordance with statutory requirements.  The appeal named 21 political 
subdivisions as appellees, but it did not name Lorain County, Elyria, Avon Lake, 
North Ridgeville, or Amherst Township as appellees. 
{¶ 8} Although not a party to the city’s appeal, in July 2003, Lorain 
County proposed a settlement to the mayor of Lorain whereby the county would 
make a one-time $500,000 payment to the city of Lorain that year, in addition to 
the 2003 distribution calculated by the 2002 methods, and a majority of the Lorain 
County political subdivisions would commit to adopting a new alternative method 
of allocating local government funds to the political subdivisions in Lorain 
County.  This new alternative method would increase the share allocated to the 
city of Lorain in the 2004 distribution year by about $640,000 while decreasing 
the share received by other political subdivisions, effectively reducing Elyria’s 
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share to 10.05 percent from 10.59, reducing Avon Lake’s share to 2.67 percent 
from 2.82, reducing North Ridgeville’s share to 3.25 percent from 3.42, and 
reducing Amherst Township’s share to 0.48 percent from 0.51.  That settlement 
also provided for a special adjustment in the 2004 distribution to reimburse Lorain 
County $250,000 of its $500,000 settlement payment made to the city of Lorain to 
resolve the 2002 appeal.  This $250,000 “carve out” would further reduce the 
amount allotted to Elyria, Avon Lake, North Ridgeville, and Amherst Township. 
{¶ 9} The city of Lorain and a majority of the other political subdivisions 
in the county adopted the new alternative method in September 2003.  When the 
matter came before the Board of County Commissioners of Lorain County for 
approval, the law director for the city of Elyria, the mayor of North Ridgeville, 
and a representative of the trustees for Amherst Township appeared and objected, 
asserting that their political subdivisions had not been made parties to the 
settlement and therefore should not be bound by it.  The commission also received 
a letter from the Amherst Township trustees and an email from the mayor of 
Avon Lake, each objecting on similar grounds.  Despite these objections, the 
commissioners approved the new alternative method. 
{¶ 10} On September 24, 2003, the Lorain County Budget Commission 
approved and adopted the new alternative method, and the BTA subsequently 
dismissed the city of Lorain’s appeal. 
{¶ 11} Elyria, Avon Lake, North Ridgeville, and Amherst Township 
appealed to the BTA, challenging their reduced share of the local government 
funds for distribution years 2004, 2005, and 2006.  The BTA dismissed the appeal 
for each distribution year due to lack of jurisdiction, finding that the four political 
subdivisions had failed to comply with R.C. 5747.55(C)(3) by not identifying the 
city of Lorain in their notice of appeal as receiving more than its proper share of 
the allocation. 
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5 
 
{¶ 12} In their initial appeal to this court, we reversed the decision of the 
BTA and held that while these political subdivisions were obligated to comply 
with R.C. 5747.55(C)(3) to maintain their appeal, they had asserted a claim that 
justified naming the county as the only overallocated subdivision, so that the BTA 
had jurisdiction to determine the merits of their claim.  Elyria v. Lorain Cty. 
Budget Comm., 117 Ohio St. 3d 403, 2008-Ohio-940, 884 N.E.2d 553, ¶ 24. 
{¶ 13} Following our remand, Elyria, Avon Lake, North Ridgeville, and 
Amherst Township withdrew their claim that the new alternative method had not 
been adopted in the manner prescribed by statute but continued to object that they 
were not parties to the settlement.  The BTA concluded that the new alternative 
method of apportionment could be applied to these political subdivisions even 
though they had not been made parties to the settlement of the prior appeal.  
Elyria v. Lorain Cty. Budget Comm. (Mar. 2, 2010), BTA Nos. 2003-M-1533, 
2004-M-1166, 2005-M-1301, 2010 WL 751773, *5.  However, it found that the 
$250,000 adjustment for distribution year 2004 intended to reimburse the county 
for half its 2003 settlement payment to the city of Lorain could not be applied to 
the four political subdivisions because the “$250,000 is traceable to the 2003-
allocation settlement,” and the BTA therefore modified the 2004 apportionment to 
the extent the carve-out applied to them.  Id. at *6. 
Positions of the Parties 
{¶ 14} In their second appeal to this court, Elyria, Avon Lake, North 
Ridgeville, and Amherst Township maintain that the restrictive language in R.C. 
5747.55(D), which provides that “no change shall, in any amount, be made in the 
amount allocated to participating subdivisions not appellees,” bars the application 
of the new alternative method to reduce their respective shares of local 
government funds for distribution years 2004, 2005, and 2006, because the 
alternative method resulted from the settlement of the earlier appeal to which they 
were not named as parties. Further, they assert that the percentage of Lorain 
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County inhabitants residing within municipal corporations exceeded 81 percent in 
2005, and pursuant to R.C. 5747.51(H) and 5747.53(E), this shift should have 
limited the percentage of local government funds allocated to the county to 30 
percent, rather than the 48.30 percent allocation it received in the 2006 
distribution.  Elyria, Avon Lake, North Ridgeville, and Amherst Township 
therefore request that the excess allocation to the county be redistributed to the 
other political subdivisions. 
{¶ 15} The  county, on the other hand, contends that the BTA lacks 
authority to grant the relief sought by the four political subdivisions because the 
statutes do not permit a “hybrid allocation” to reinstate the pre-2004 allocations to 
the four political subdivisions and reduce the share to the county, while also 
maintaining the allocations that other political subdivisions received pursuant to 
the alternative method adopted for 2004, 2005, and 2006.  It further argues that 
R.C. 5747.55(D) does not apply to this appeal, urging that while this statute may 
prevent a reduction in the apportionment for 2003, it does not override the new 
apportionment method adopted for subsequent years.  The city of Lorain largely 
joins this argument. 
{¶ 16} Lorain County cross-appeals, suggesting that the notice of appeal 
to the BTA does not mention or specifically seek relief as to the carve-out, and it 
also asserts that the BTA erred in characterizing a portion of the 2004 allocation – 
the $250,000 special adjustment – as a reallocation of funds that had been the 
subject of a prior appeal, because the four political subdivisions’ 2003 allocation 
could not be reduced by an alternative method of apportionment allocating local 
government funds for subsequent years.  Thus, the county maintains that the BTA 
created a new method of apportioning local government funds not authorized by 
statute. 
{¶ 17} The four political subdivisions maintain that the BTA had 
authority pursuant to R.C. 5747.55(E) to eliminate the carve-out from the 2004 
January Term, 2011 
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apportionment, because it reduced their share of local government funds as the 
result of an appeal to which they were not made parties in violation of R.C. 
5747.55(D). 
Law and Analysis 
{¶ 18} Pursuant to R.C. 5747.53(G) and former R.C. 5747.63(G), 149 
Ohio Laws, Part IV, 7881, 7890, the BTA reviews the budget commission’s 
actions in adopting the alternative formula for an abuse of discretion.  However, 
our review is more limited.  As we explained in E. Liverpool v. Columbiana Cty. 
Budget Comm. (2000), 90 Ohio St.3d 269, 271, 737 N.E.2d 44, “[w]e are 
confined to our statutorily delineated duty of determining whether the BTA's 
decision is reasonable and lawful.” 
{¶ 19} With an exception not relevant here, R.C. 5747.53(B) and former 
R.C. 5747.63(B), 149 Ohio Laws, Part IV, 7881, 7888, authorized the county 
budget commission to adopt an alternative method of apportioning local 
government funds, requiring only that the board of county commissioners, the 
legislative authority of the county’s city with the greatest population, and a 
majority of the remaining political subdivisions in the county first approve it.  As 
we explained in E. Liverpool v. Columbiana Cty. Budget Comm., 105 Ohio St.3d 
410, 2005-Ohio-2283, 827 N.E.2d 310, ¶ 10, “[t]he alternative method under R.C. 
5747.53 and [former] 5747.63 * * * does not require the budget commission to 
afford political subdivisions an opportunity to be heard under oath before 
allocating ULGF and ULGRAF dollars, because those statutes only require the 
county board of commissioners and the appropriate political subdivisions to 
approve the alternative formula before it is adopted by the budget commission. 
Accordingly, when the commission and the county's political subdivisions have 
already approved an alternative formula, the statutes do not require the 
commission to provide a hearing prior to adopting an alternative formula.” 
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{¶ 20} Elyria, Avon Lake, North Ridgeville, and Amherst Township do 
not dispute that the county budget commission complied with the applicable 
statutory procedures in adopting the new alternative method of apportionment, 
admitting that any contrary argument is jurisdictionally barred.  Further, the 
record reflects that the four political subdivisions had notice and an opportunity to 
be heard before the budget commission adopted the new alternative method.  In 
accordance with law, the board of county commissioners, the county’s city with 
the greatest population, and a majority of the remaining political subdivisions in 
the county approved the new alternative method before the budget commission 
adopted it.  Elyria, Avon Lake, North Ridgeville, and Amherst Township were 
outvoted, and the budget commission adopted the new alternative method. 
{¶ 21} R.C. 5747.55(D), however, states that “no change shall, in any 
amount, be made in the amount allocated to participating subdivisions not 
appellees” to the appeal of a county budget commission apportionment.  When 
the city of Lorain appealed the 2002 apportionment of local government funds, 
the appeal could not affect the share of any political subdivision for distribution 
year 2003 not named as a party, but could reduce the respective share of only the 
political subdivisions indentified in the notice of appeal as receiving more than 
their proper shares.  See R.C. 5747.55(C)(3) and (D). 
{¶ 22} The new alternative method adopted by the county budget 
commission, which prescribes the percentage share of local government funds 
allocated to each political subdivision, applies prospectively for 2004, 2005, and 
2006.  While the idea for a new alternative method may have arisen during 
negotiations to settle the city of Lorain’s appeal, the settlement did not itself 
reduce the respective shares of the 2002 apportionment allocated in 2003 to 
Elyria, Avon Lake, North Ridgeville, and Amherst Township.  Rather, it was the 
county budget commission’s adoption of the new alternative method in 
accordance with R.C. 5747.53(B) and former R.C. 5747.63(B) that reduced the 
January Term, 2011 
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percentage of local government funds that the four political subdivisions received.  
R.C. 5747.53(D) and former R.C. 5747.63(D), 149 Ohio Laws, Part IV, 7881, 
7890, vested the county budget commission with discretion to include “any 
factor” it considered appropriate and reliable in apportioning local government 
funds, and the four political subdivisions have not demonstrated that the budget 
commission abused its discretion in determining their percentage shares of those 
funds. 
{¶ 23} In contrast, the parties to the 2003 appeal explicitly intended the 
$250,000 special adjustment to the new alternative method of apportionment for 
2004 to reimburse the county for part of the payment it made to the city of Lorain 
to settle the appeal.  This carve-out is directly traceable to the settlement, and 
because Elyria, Avon Lake, North Ridgeville, and Amherst Township were not 
parties to it, their respective shares could not be reduced to offset money tendered 
to settle the appeal.  The county budget commission therefore abused its 
discretion in reducing the amount allocated to the these four political subdivisions 
based on the 2003 settlement payment of $250,000, and the BTA reasonably and 
lawfully modified the 2004 apportionment to the extent the special adjustment 
had been applied to them. 
{¶ 24} Finally, while the four political subdivisions contend that the BTA 
should have considered their argument that the county received more than its 
proper share of the 2006 distribution because the municipal population of Lorain 
County had surpassed 81 percent of the total population, they failed to raise this 
issue in their initial merit brief on remand from this court and waited until their 
reply brief to present this issue to the BTA.  As we explained in HealthSouth 
Corp. v. Levin, 121 Ohio St.3d 282, 2009-Ohio-584, 903 N.E.2d 1179, “the 
omission of an argument from a party's brief may be deemed to waive that 
argument,” and the BTA therefore did not commit reversible error when it 
declined to address this belated argument.  Id. at ¶ 18, fn. 2, citing E. Liverpool v. 
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Columbiana Cty. Budget Comm., 116 Ohio St.3d 1201, 2007-Ohio-5505, 876 
N.E.2d 575, ¶ 3; see also State ex rel. Grounds v. Hocking Cty. Bd. of Elections, 
117 Ohio St.3d 116, 2008-Ohio-566, 881 N.E.2d 1252, ¶ 24 (tribunal need not 
address an argument raised for the first time in a reply brief). 
Conclusion 
{¶ 25} Ohio law authorized the county budget commission to adopt an 
alternative method of apportionment of local government funds provided that the 
board of county commissioners, the legislative authority of that county’s city with 
the greatest population, and a majority of the remaining political subdivisions in 
the county first approved it.  The BTA determined that the statutory requirements 
were met, and the record supports that determination.  Accordingly, the BTA 
reasonably and lawfully approved the alternative method of apportioning local 
government funds prescribing the percentage share for each political subdivision 
for distribution years 2004, 2005, and 2006. 
{¶ 26} However, a special adjustment to the method of apportionment for 
one year intended to offset money tendered to settle the appeal of a prior year’s 
apportionment may not be applied to political subdivisions that were not parties to 
the appeal.  In accord with this precept, the BTA reasonably and lawfully found 
that the $250,000 carve-out at issue in this case could not be applied against the 
shares of local government funds allocated to Elyria, Avon Lake, North 
Ridgeville, and Amherst Township in 2004. 
{¶ 27} For these reasons, on the appeal, we affirm the decision of the 
BTA to uphold the new alternative method adopted for distribution years 2004, 
2005, 2006.  Furthermore, on the county’s cross-appeal, we affirm the decision of 
the BTA to eliminate for these appellants and cross-appellees the $250,000 
adjustment applied against them in 2004. 
Decision affirmed. 
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O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, LANZINGER, CUPP, 
and MCGEE BROWN, JJ., concur. 
__________________ 
 
Terry S. Shilling and Michelle D. Nedwick, Elyria Law Director, for 
appellants and cross-appellees city of Elyria and Amherst Township. 
 
Zagrans Law Firm, L.L.C., and Eric H. Zagrans, for appellant and cross-
appellee city of North Ridgeville. 
 
William J. Kerner Sr., for appellant and cross-appellee city of Avon Lake. 
 
Thompson Hine, L.L.P., John T. Sunderland, and John B. Kopf, for 
appellees and cross-appellants Lorain County and Lorain County Board of County 
Commissioners. 
 
John R. Varanese, for appellee city of Lorain. 
______________________