Title: Lancaster v. Fairfield Cty. Budget Comm.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Lancaster v. Fairfield Cty. Budget Comm., 86 Ohio St.3d 137, 1999-Ohio-142.] 
 
 
 
 
CITY OF LANCASTER, APPELLEE AND CROSS-APPELLANT, v. FAIRFIELD COUNTY 
BUDGET COMMISSION ET AL., APPELLANTS AND CROSS-APPELLEES. 
[Cite as Lancaster v. Fairfield Cty. Budget Comm. (1999), 86 Ohio St.3d 137.] 
Taxation — Income tax — R.C. 5747.53 and 5747.63 — Apportioning Undivided 
Local Government Fund and Undivided Local Government Revenue 
Assistance Fund — Approval of alternative formula for apportioning monies 
in funds — Governmental units that have not limited their approvals to a 
specific period of time need not thereafter annually reapprove the same 
formulas for use in subsequent years. 
Where, pursuant to R.C. 5747.53 and 5747.63, the requisite number of governmental 
units in a county have approved the use of alternative formulas for 
apportioning the monies in the Undivided Local Government Fund and 
Undivided Local Government Revenue Assistance Fund designated for that 
county, those governmental units that have not limited their approvals to a 
specific period of time need not thereafter annually reapprove the same 
formulas for use in subsequent years. 
(No. 98-1059   — Submitted April 14, 1999 — Decided July 28, 1999.) 
APPEAL and CROSS-APPEAL from the Board of Tax Appeals, Nos. 97-D-1172 and 97-
D-1173. 
 
The Undivided Local Government Fund (“ULGF”) and the Undivided Local 
Government Revenue Assistance Fund (“ULGRAF”) are established by R.C. 
Chapter 5747 to provide state financial support to smaller governmental units in 
Ohio.  The statutory scheme provides two options for distribution of monies in the 
funds:  R.C. 5747.51 and 5747.62 provide “statutory” methods of distributing ULGF 
and ULGRAF funds to local governmental entities; and R.C. 5747.53 and 5747.63 
authorize “alternative” methods of apportioning ULGF and ULGRAF allocations.  
2 
The instant appeal concerns the distribution of ULGF and ULGRAF funds to 
governmental units located in Fairfield County for budget years 1998 and thereafter. 
 
On April 8, 1996, and pursuant to R.C. 5747.53 and 5747.63, appellant 
Fairfield County Budget Commission (“budget commission”) approved a motion to 
adopt alternative formulas to allocate the county’s ULGF and ULGRAF funds 
among the governmental units entitled to receive them.  By September 1, 1996, the 
budget commission had obtained approval of these alternative formulas from the 
following governmental units: the Fairfield County Board of Commissioners, the city 
of Columbus (“Columbus”), as the “city, located wholly or partially in the county, 
with the greatest population,”1 and a majority of the boards of township trustees and 
legislative authorities of municipal corporations in the county. 
 
The Columbus resolution which approved use of the alternative formulas for 
apportioning the ULGF and ULGRAF monies in Fairfield County, provided, 
however, that the approval was effective “beginning in 1996 for funds distributed in 
1997, only.”  (Columbus City Ordinance 56X-96.) Columbus thereby limited its 
approval of use of the alternative formula for a specific period of time.  The other 
governmental units did not limit their approvals.  The budget commission allocated 
the 1997 funds under the formulas. 
 
On April 21, 1997, the Columbus City Council adopted an additional 
resolution approving the alternative formulas proposed by the county budget 
commission.  The percentages determining distribution of 1998 funds to all affected 
local Fairfield County governmental units were unchanged from those approved in 
the earlier resolution.  An explanatory statement accompanying the Columbus 
resolution noted that “[t]he legislation passed in 1996 was for distribution of taxes in 
1997 only.  The Fairfield County Auditor is requesting the alternate formula be 
adopted [by the city of Columbus] for years 1998 and after, thus eliminating the need 
to submit legislation annually.”  Accordingly, the April 21 resolution did not contain 
3 
language purporting to limit the city’s approval to a specific period of time.  
(Columbus City Ordinance 44X-97.)  The budget commission, without obtaining any 
other approvals, thereafter allocated the 1998 funds under the alternative formulas. 
 
The city of Lancaster filed a notice of appeal with the BTA, challenging the 
1998 allocations under the alternative formulas.  Lancaster claimed that the 
alternative allocation formulas were not legally applicable to the 1998 allocations, in 
that the county budget commission had not obtained a valid approval for use of the 
alternative formulas in 1998 from all necessary governmental units.  Lancaster 
sought application of the statutory method of allocation provided in R.C. 5747.51 and 
5747.62. 
 
The BTA reversed the budget commission’s allocations and remanded the case 
to the budget commission for it to allocate the funds under the statutory formulas of 
R.C. 5747.51 and 5747.62.  The BTA ruled that, because Columbus had approved 
the formulas for 1997 only, the budget commission needed to obtain additional 
approvals from the other participants in the funds for subsequent years.  The BTA 
further ruled that all alternative formulas terminate implicitly after one year and 
require annual approvals by the participants in the funds. 
 
The cause is before this court upon an appeal and cross-appeal as of right. 
__________________ 
 
John R. Varanese, for appellee and cross-appellant. 
 
David L. Landefeld, Fairfield County Prosecuting Attorney, and Roy E. Hart, 
Assistant Prosecuting Attorney, for appellants and cross-appellees, Fairfield County 
Budget Commission; Fairfield County Park District; County of Fairfield; Townships 
of Amanda, Clearcreek, Greenfield, Hocking, Liberty, Madison, Richland, and 
Walnut; and Villages of Amanda, Baltimore, Bremen, Carroll, Lithopolis, 
Millersport, Pleasantville, Rushville, Stoutsville, Sugar Grove, Thurston, and West 
Rushville; and City of Pickerington. 
4 
 
Teaford, Rich & Wheeler and James R. Gorry, urging reversal for amicus 
curiae, Ohio County Auditors’ Association. 
 
Michael T. Callahan, Summit County Prosecuting Attorney, and Austin B. 
Barnes III, Assistant Prosecuting Attorney, urging reversal for amici curiae, Ohio 
Prosecuting Attorneys’ Association and the County Commissioners’ Association of 
Ohio. 
__________________ 
 
MOYER, C.J.  This appeal presents two legal issues: (1) whether, pursuant to 
R.C. 5747.53 and 5747.63, the budget commission must secure annual approvals 
from all the participants in order to allocate the ULGF and the ULGRAF pursuant to 
the alternative formulas, and (2) whether the budget commission must secure 
approval from all participants for succeeding years if one of the participants in these 
funds initially limited its approval of the alternative formulas to one year, but 
thereafter approved use of an alternative formula without limiting it to a specific time 
period.  We answer both of these interrelated inquiries in the negative. 
 
We described the local government fund established by R.C. Chapter 5747 in 
Andover Twp. v. Ashtabula Cty. Budget Comm. (1977), 49 Ohio St.2d 171, 173-174, 
3 O.O.3d 238, 239, 360 N.E.2d 690, 691-692, as follows: 
 
“The local government fund is a form of financial state support of the smaller 
governmental units existing in Ohio.  It is composed of a portion of the state sales tax 
receipts and the state-collected tax on ‘capital employed by financial institutions, and  
* * * by dealers in intangibles.’  These funds are transferred by the state auditor to the 
several counties for distribution to the local subdivisions.  A group of three county 
officials, designated as the budget commission, then has the responsibility of 
allocating the local government fund.  The budget commission may apportion such 
funds on a straight formula basis, the ‘statutory method,’ or by the ‘alternative 
method,’ which latter method allows the budget commission to consider any factor 
5 
deemed to be ‘appropriate and reliable,’ in its sole discretion.  The budget 
commission meets annually, on the first Monday in August, at which time it 
considers the budget submitted by each governmental subdivision.” 
 
R.C. 5747.53 and 5747.63 provide for alternative formulas in nearly identical 
language: 
 
“(A) In lieu of the method of apportionment of the undivided local government 
fund [undivided local government revenue assistance fund] of the county provided by 
section 5747.51 [5747.62] of the Revised Code, the county budget commission may 
provide for the apportionment of such fund under an alternative method or on a 
formula basis as authorized by this section.  Such alternative method of 
apportionment shall have first been approved by all of the following government 
units: the board of county commissioners; the legislative authority of the city, located 
wholly or partially in the county, with the greatest population; and a majority of the 
boards of township trustees and legislative authorities of municipal corporations, 
located wholly or partially in the county, excluding the legislative authority of the 
city with the greatest population.   * * * Any method of apportionment adopted and 
approved under this section may be revised, amended, or repealed in the same 
manner as it may be adopted and approved.  In the event a method of apportionment 
adopted and approved under this section is repealed, the undivided local government 
fund [undivided local government revenue assistance fund] of the county shall be 
apportioned among the governmental units eligible to participate therein, 
commencing in the ensuing calendar year, under the apportionment provided in 
section 5747.52 [5747.62] of the Revised Code, unless a new method for 
apportionment of such fund is provided in the action of repeal. 
 
“* * * 
 
“(E) The actions of the budget commission taken pursuant to this section are 
final and may not be appealed to the board of tax appeals, except on issues of abuse 
6 
of discretion and failure to comply with the formula.”  R.C. 5747.53; [R.C. 5747.63]. 
 
The city of Lancaster argues that these statutes require participants to approve 
the alternative formula each year.  The BTA accepted this argument.  The county 
budget commission contends, to the contrary, that alternative formulas need not be 
formally approved on an annual basis. 
 
In requiring annual approvals, the BTA relied on Andover.  In that case, the 
city of Ashtabula had annually approved the budget commission’s alternative 
formula, originally approved in 1972, for each of the next three years.  Ashtabula 
limited each approval to the current budget year, and the other participating 
governmental units apparently did the same.  In 1976, however, Ashtabula declined 
to adopt the alternative formula.  The court, on appeal, permitted Ashtabula to limit 
its approval to one-year periods.  In dictum, the court concluded that “the entire 
statutory scheme implies an annual determination of the method of distribution.”  
Andover, 49 Ohio St.2d at 175, 3 O.O.3d at 240, 360 N.E.2d at 692. 
 
Thereafter, in Girard v. Trumbull Cty. Budget Comm. (1994), 70 Ohio St.3d 
187, 638 N.E.2d 67, the court, in explaining the importance of adopting an alternative 
formula by September 1, the statutory deadline, stated: 
 
“It is this very necessity of ascertaining the intent of the various governmental 
units that requires the adoption procedure to commence anew in the following year, 
especially since ‘the entire scheme implies an annual determination of the method of 
distribution.’ ”  Girard, 70 Ohio St.3d at 192-193, 638 N.E.2d at 72, quoting 
Andover, 49 Ohio St.2d at 175, 3 O.O.3d at 240, 360 N.E.2d at 692. 
 
Upon additional review of the relevant statutes, we are convinced that R.C. 
5747.53 and 5747.63 do not necessarily require adoption of an alternative formula by 
the necessary number of governmental units on an annual basis, and we therefore 
disavow dicta in Andover and Girard to the contrary. 
 
The statutes prescribe an elaborate procedure, by which the budget 
7 
commission proposes the formula and the specified governmental units must each 
approve the formula: the board of county commissioners, the legislative authority of 
the city with the greatest population, and a majority of the legislative authorities of 
the remaining participating governmental units.  The formula fails if one of these 
units disapproves. 
 
The formula thereafter may be revised, amended, or repealed if done so in the 
same manner as adopted and approved.  That is, these governmental units must agree 
to revise, amend, or repeal the formula.  If the formula is repealed, the budget 
commission must apply the statutory formula for the ensuing calendar year, unless 
the governmental units adopt a new formula. 
 
Neither R.C. 5747.53 nor 5747.63 mentions annual approvals.  The statutes set 
forth a procedure for adoption of a formula to allocate the funds by agreement of the 
participating governmental units.  Using phrases usually applicable to legislation, 
these statutes authorize the governmental units to revise, amend, or repeal the 
formula in the same manner as they had adopted the original formula.  If the formula 
is repealed, the budget commission is to allocate the funds under the statutory 
formula unless the governmental units adopt a new formula.  Accordingly, under 
these statutes, and after initial and unlimited approval, additional action by the 
necessary governmental units is required only in order to revise, amend, repeal, or 
adopt a new formula. 
 
We therefore hold that where, pursuant to R.C. 5747.53 and 5747.63, the 
requisite number of governmental units in a county have approved the use of 
alternative formulas for apportioning the monies in the Undivided Local Government 
Fund and Undivided Local Government Revenue Assistance Fund designated for that 
county, those governmental units that have not limited their approvals to a specific 
period of time need not thereafter annually reapprove the same formulas for use in 
subsequent years. 
8 
 
We also reject Lancaster’s argument that the budget commission’s initial 
proposal was for adoption of alternative formulas to be used for the 1997 budget year 
only.  It is true that the April 8, 1996 budget commission motion adopted alternative 
formulas “for apportioning county ULG[F] and ULGRA[F] funds beginning in 1996 
for funds distributed in 1997.” However, in including the language “beginning in 
1996,” the motion suggested that the formulas would continue to be followed after 
1996. Thus, although the budget commission intended to distribute funds annually, 
we do not accept the claim that the commission intended to limit the life of the 
alternative formulas to one year only. 
 
In Andover, Justice William B. Brown, dissenting, observed that “R.C. 
5705.27 and 5705.30, which refer to the annual levy of taxes and review of local 
budgets by the county budget commission, R.C. 5747.50, which guarantees an annual 
minimum of $150,000 for each county local government fund, and R.C. 5747.51, 
which sets up the statutory alternative to R.C. 5747.53, merely reflect the fact that 
most tax revenues are collected, and local budgets are usually drawn up, on an annual 
basis.  The annual levy and collection of taxes should not affect the duration of an 
apportionment plan regulating how, and not when, funds are to be allocated.”  
(Emphasis sic.)  Andover, 49 Ohio St.2d at 176, 3 O.O.3d at 234-241, 360 N.E.2d at 
693  (Brown, J., dissenting). 
 
We agree with this portion of Justice Brown’s reasoning.  Although the 
budgeting process for distribution of ULGF and ULGRAF funds is annual, approval 
of the alternative formula is not.  The statutes authorizing the alternative formulas 
establish them as long-term resolutions in allocating these funds. 
 
Lancaster also urges us to affirm the decision of the BTA that the budget 
commission needed to obtain renewed approvals in 1997 from all the participating 
governmental units, even though their earlier approvals had not been restricted, based 
on the fact that Columbus had limited its approval to one year.  According to the 
9 
BTA, Columbus should not have “the sole and exclusive annual right to determine on 
behalf of all the participating [governmental units] whether it would approve, 
disapprove or refuse to act with regard to the previously adopted alternative formula 
being applicable to one or more later years, while the other ‘governmental units’ 
involved had no such right or authority to make such an annual decision on their own 
behalf.” 
 
We do not accept the BTA’s reasoning.  Columbus did not have the sole and 
exclusive annual right to determine approval of formulas.  Under Andover, any or all 
of the governmental units could have limited their approvals to one year.  However, 
they did not.  The statutes do not set forth a procedure to approve these formulas 
annually, and nothing in the case law requires annual approval of the formula by all 
governmental units if one such unit has limited its approval to one year.  Andover 
permits governmental units to restrict approvals to one year; it does not prevent the 
remaining participants from granting approvals not so restricted. 
 
The fact that one of the participants in these funds limits its approval of the 
alternative formulas to one year, does not trigger an obligation on the part of the 
budget commission to secure approval from the other participants for succeeding 
years.  If the other participants grant unlimited approval, the budget commission 
should enforce their approval and allocate the funds without seeking their reapproval. 
 
The city of Lancaster alleged violations of R.C. 121.22, the Open Meetings 
Law, before the BTA.  The BTA did not address those allegations in its opinion, 
and the city of Lancaster has failed to show how its Open Meetings Law claims are 
arguably within the subject-matter jurisdiction of the BTA.  Cf. R.C. 5703.02(A).  
(The BTA has subject-matter jurisdiction to “hear and determine all appeals of 
questions of law and fact arising under the tax laws of this state in appeals from 
decisions, orders, determinations, or actions of any tax administrative agency 
established by the law of this state.”)  We therefore will not address them. 
10 
 
In its cross-appeal, the city of Lancaster challenges the nature of the order of 
remand issued by the BTA.  Our disposition of the primary appeal renders this 
cross-appeal moot. 
 
For the foregoing reasons, the decision of the Board of Tax Appeals is 
reversed. 
Decision reversed. 
 
DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK and LUNDBERG 
STRATTON, JJ., concur. 
FOOTNOTE: 
1. 
See Lancaster v. Fairfield Cty. Budget Comm. (1998), 83 Ohio St.3d 242, 
243, 699 N.E.2d 473, 474.  See, also, pending H.B. No. 185, which would amend 
R.C. 5747.53 and 5747.63 to provide for approval by the “legislative authority of 
the city, located wholly or partially in the county, with the greatest population 
residing in the county.”  (Emphasis added.)