Title: Reynoldsburg v. Licking Cty. Budget Comm.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Reynoldsburg v. Licking Cty. Budget Comm., 104 Ohio St.3d 453, 2004-Ohio-6773.] 
 
 
CITY OF REYNOLDSBURG, APPELLEE, v. LICKING COUNTY BUDGET 
COMMISSION ET AL., APPELLANTS. 
[Cite as Reynoldsburg v. Licking Cty. Budget Comm., 104 Ohio St.3d 453, 
2004-Ohio-6773.] 
Budget Commissions — Apportioning Undivided Local Government Fund and 
Undivided Local Government Revenue Assistance Fund — Approval of 
alternate formula for apportioning monies in funds — Timely appeals — 
Once alternative methods of apportionment are approved, they remain in 
effect until revised, amended, or repealed pursuant to statute. 
(No. 2003-0414 — Submitted September 14, 2004 — Decided December 17, 
2004.) 
APPEAL from the Board of Tax Appeals, Nos. 2001-T-162, 2001-T-163, 2001-T-
1105, 2001-T-1106. 
__________________ 
 
FRANCIS E. SWEENEY, SR., J. 
{¶ 1} This case is a consolidation of two separate groups of cases 
decided by the Board of Tax Appeals (“BTA”).  All the cases were brought by the 
city of Reynoldsburg, appellee, challenging the Licking County Budget 
Commission’s distribution of two local government funds:  the Undivided Local 
Government Fund (“ULGF”) and the Undivided Local Government Revenue 
Assistance Fund (“ULGRAF”).  The appellants are the Licking County Budget 
Commission and all the other subdivisions in Licking County entitled to share in 
the distribution of the ULGF and ULGRAF. 1 
                                          
 
1. For ease of discussion, appellants are collectively called the “budget commission.” 
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{¶ 2} In the first group of cases, appellees had challenged the 
distribution of these funds for years 1997-2001.  In the second group, appellees 
had challenged the distribution of these funds for 2002.  These cases were 
originally filed with the BTA as four separate appeals challenging the distribution 
of funds for years 1997 and 1998.  Each appeal challenged the distribution of one 
of the funds for each year.  The BTA decided all four appeals in Reynoldsburg’s 
favor and limited its decision to whether the formula method utilized for 
distribution of these funds needed to be voted on annually by all of the affected 
governmental entities. 
{¶ 3} The BTA’s decision was appealed to this court.  We reversed, 
without opinion, on the authority of Lancaster v. Fairfield Cty. Budget Comm. 
(1999), 86 Ohio St.3d 137, 712 N.E.2d 719 (which held that when participating 
subdivisions have not placed any time limits on their approval of an alternative 
method, they need not give their approval to the same alternative method each 
year thereafter).  Reynoldsburg v. Licking Cty. Budget Comm. (1999), 86 Ohio 
St.3d 559, 715 N.E.2d 1143. 
{¶ 4} Upon remand, the budget commission filed a stipulation stating 
that Reynoldsburg was entitled to participate in the county’s alternative method 
under the ULGF and ULGRAF for distribution years 1997 and 1998.  At the same 
time, the budget commission moved the BTA to remand the matter to the budget 
commission, with instructions to fit Reynoldsburg into the alternative method so it 
could share in the funds for the distribution years 1997 and 1998.  Reynoldsburg 
neither signed the stipulation nor contested the motion.  In 2000, the BTA granted 
the motion and remanded, with orders to (a) allocate Reynoldsburg a share of the 
local government funds for distribution years 1997 and 1998 and (b) incorporate 
Reynoldsburg as a participant “under the County’s alternate ULGF method and its 
alternate ULGRAF formula.” 
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{¶ 5} In compliance with the remand order, in 2001, the budget 
commission made an allocation for Reynoldsburg.  However, rather than merely 
allocating amounts under the alternative formulas for distribution years 1997 and 
1998 as instructed by the BTA, the budget commission, sua sponte, also allocated 
amounts to Reynoldsburg for distribution years 1999, 2000, and 2001.  
Reynoldsburg filed appeals with the BTA from the allocations of the budget 
commission, attempting to challenge the budget commission’s distributions for 
the years 1997-2001. 
{¶ 6} Reynoldsburg had not filed appeals with the BTA following the 
budget commission’s allocations in each of the distribution years 1999, 2000, and 
2001.  However, Reynoldsburg did file timely appeals with the BTA challenging 
the budget commission’s original ULGF and ULGRAF allocations for the 
distribution year 2002.  For distribution year 2002, Reynoldsburg contended that 
the budget commission failed to allocate the two funds according to the statutory 
method or, in the alternative, that the budget commission erred in calculating 
Reynoldsburg’s share under the alternative formula. 
{¶ 7} The BTA found that the budget commission had not adopted the 
alternative method for allocating ULGF in a timely manner because the budget 
commission did not vote to adopt the alternative method of distribution for the 
ULGF until after the September 1, 1972 deadline for approving distributions for 
1973, making the 1973 and all subsequent alternative methods of distribution a 
nullity.  The BTA further found that because the 1972 alternative distribution 
method was a nullity, the statutory formula should have been used to allocate 
funds during the years in question. 
{¶ 8} Legislation distributing the ULGRAF did not become effective 
until July 1, 1989. Am.Sub.H.B. No. 111, 143 Ohio Laws, Part II, 2351, 2630.  
The legislation gave budget commissions 60 days after the effective date to 
determine the manner in which the ULGRAF was to be distributed for the last six 
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months of 1989.  Id. at 2827.  The BTA found that the budget commission did not 
adopt the alternative method for the ULGRAF until its meeting of October 6, 
1989, which was after the deadline set by the General Assembly for 1989 
ULGRAF distribution.  Id.  The ULGRAF alternative method adopted by the 
budget commission in 1989 has been used ever since. 
{¶ 9} Neither of the alternative methods approved by the budget 
commission in 1973 or 1989 contained a specified starting date.  The ULGF 
distributions made in 1973 and the ULGRAF distributions made by the budget 
commission for the second half of 1989 and 1990 are not being contested.  What 
is contested is the continuing use of the alternative methods by the budget 
commission during the ensuing years.  Reynoldsburg first filed a budget with the 
budget commission in 1996 for distribution year 1997 and has filed a budget each 
year since. 
{¶ 10} In a consolidated decision applicable to both groups of cases, the 
BTA determined that the budget commission did not adopt either of the 
alternative methods for the funds in a timely manner.  As a result, the BTA found 
that the alternative methods used by the budget commission to distribute the 
ULGF and ULGRAF were invalid for all ensuing years and that therefore the 
funds should have been distributed using the statutory method. 
{¶ 11} This cause is now before the court upon an appeal as of right. 
{¶ 12} The ULGF and the ULGRAF are established by R.C. Chapter 5747 
to provide state financial support to smaller governmental units in the state.  
Lancaster v. Fairfield Cty. Budget Comm., 86 Ohio St.3d 137, 712 N.E.2d 719.  
Monies for these funds are collected by the state from such taxes as the sales tax, 
use tax, dealer-in-intangibles tax, public utility tax, income tax, and the franchise 
tax for the financial support of local government units.  See R.C. 5739.21, 
5741.03, 5725.24, 5727.45, 5727.84, 5747.03, and 5733.12. The state disburses 
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monies to each county and, in turn, the county’s budget commission determines 
the amount to be distributed to each eligible local subdivision in the county. 
{¶ 13} Basically, there are two methods utilized by a county budget 
commission to distribute the funds: (1) the statutory method delineated in  R.C. 
5747.51 and 5747.62 and (2) the alternative-formula method delineated in R.C. 
5747.53 and 5747.63.  If no action is taken by the budget commission, the funds 
are distributed by the statutory method.  However, if the budget commission is 
able to secure the approval of the necessary government units, it may adopt an 
alternative formula that sets forth an agreed-upon method or percentage for the 
distribution of the funds to each governmental unit. 
{¶ 14} The procedure for a budget commission to adopt an alternative 
method is found in R.C. 5747.53 (ULGF) and R.C. 5747.63 (ULGRAF).  Because 
the procedure for adoption of an alternative method is essentially the same for 
both the ULGF and ULGRAF, reference will be made only to R.C. 5747.53(B), 
which provides: 
{¶ 15} “[T]he county budget commission may provide for the 
apportionment of the fund under an alternative method or on a formula basis as 
authorized by this section. 
{¶ 16} “* * * [T]he alternative method of apportionment shall have first 
been approved by all of the following governmental 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, located 
wholly or partially in the county,  with the greatest population.” 
{¶ 17} Another relevant statute is R.C. 5705.27, which provides: 
{¶ 18} “The [budget] commission shall meet at the office of the county 
auditor in each county on the first Monday in February and on the first Monday in 
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August, annually, and shall complete its work on or before the first day of 
September, annually, unless for good cause the tax commissioner extends the time 
for completing the work.” 
{¶ 19} Appellants contend that alternative methods need not be adopted 
and approved by September 1 of any specific year unless the adopting language 
makes the alternative method applicable to a year for which the approval date has 
passed.  Since the budget commission did not adopt that kind of retroactive 
alternative method, appellants contend that the two alternative methods are still 
valid.  However, Reynoldsburg asserts that the budget commission did not adopt 
the ULGF and ULGRAF alternative methods in a timely manner in 1972 and 
1989, and so those methods remain invalid today. 
{¶ 20} Three prior decisions guide our decision.  In Andover Twp. v. 
Ashtabula Cty. Budget Comm. (1977), 49 Ohio St.2d 171, 3 O.O.3d 238, 360 
N.E.2d 690, the city of Ashtabula approved an alternative method for distribution 
of the ULGF only one year at a time.  Thus, the county budget commission 
needed Ashtabula’s approval each year to implement the alternative method.2  In 
1976, Ashtabula declined to approve the alternative method, and the budget 
commission allocated the funds under the statutory method.  The Ashtabula 
County townships that appealed from the decision of the budget commission 
contended that once the alternative method had been adopted, it could be 
amended or adopted only in the same manner in which it had been originally 
adopted and approved.  One of the contentions raised by the townships was that 
adoption of the alternative method by the various governmental units constituted a 
contract.  We rejected the townships’ attempt to apply contract law and 
determined that the city of Ashtabula was not indefinitely locked into the 
alternative method “when it has expressly limited its participation in that method 
                                          
 
2. Apparently, the approvals of the other governmental units were not limited to any time period.   
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to a definite period of time.”  Id., 49 Ohio St.2d at 174-175, 3 O.O.3d 238, 360 
N.E.2d 690. 
{¶ 21} In Girard v. Trumbull Cty. Budget Comm. (1994), 70 Ohio St.3d 
187, 638 N.E.2d 67, we considered the effect of a multi-year alternative method 
that was adopted on October 1, 1990, after the September 1, 1990 statutory 
deadline for distribution year 1991.  The resolution adopting the alternative 
method provided that it was “for the years 1991 through 2000, inclusive .”  Id., 70 
Ohio St.3d at 187, 638 N.E.2d 67.  The budget commission, while admitting that 
the alternative method was not valid for distribution year 1991, argued that it 
should be valid for distribution years 1992-2000.  We disagreed, holding, “The 
[September 1] deadline is a statutory precondition to the existence of a purported 
alternative method of allocation, regardless of its intended longevity.” Id., 70 
Ohio St.3d at 192, 638 N.E.2d 67.  The court, citing the BTA’s reasoning, stated 
that if the alternative method became effective, “ ‘the objectives of the 
participating subdivisions for the first year [1991], which is clearly invalid, could 
be frustrated.’ ”  Id.  The court further noted: “It would then be necessary to 
determine the intent of the various participating governmental units in approving 
the adoption of the alternative method formula.  Such a contractual analysis, 
however, is precisely what this court rejected in Andover * * *.”  Id. 
{¶ 22} In Lancaster v. Fairfield Cty. Budget Comm., 86 Ohio St.3d 137, 
712 N.E.2d 719, the Fairfield County Budget Commission had obtained approval 
from the necessary subdivisions to use an alternative method.  However, the 
approval granted by the city of Columbus provided that it was effective 
“beginning in 1996 for funds distributed in 1997, only.”  Id. at 138, 712 N.E.2d 
719.  None of the other subdivisions had limited their approvals.  For 1998, the 
distribution percentages remained the same as they were for 1997; however, 
Columbus’s approval for 1998 did not contain language purporting to limit the 
city’s approval to a specific time.  Lancaster contended that the alternative 
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methods were not valid for the 1998 distribution because the other necessary 
subdivisions had not given their approval.  Thus, Lancaster argued that each 
participant had to approve the alternative methods each year. 
{¶ 23} Lancaster presented this court with two issues: (1) whether R.C. 
5747.53 and R.C. 5747.63 required the budget commission to secure annual 
approvals of all the necessary subdivisions in order to use the alternative method 
of apportionment and (2) whether the budget commission must secure approval 
from all participants for succeeding years if one of the necessary participants had 
originally limited its participation to one year but thereafter had given its approval 
without limiting the approval to a specific period. 
{¶ 24} As to the first issue, we held that when the required subdivisions 
had given their approval to the alternative method and the approvals had not been 
limited to a specific time, a budget commission did not need to thereafter annually 
obtain reapproval of that alternative method for subsequent years. 
{¶ 25} As to the second issue, we held that even if one of the subdivisions 
had limited its approval to one year, that fact did not trigger an obligation on the 
part of the budget commission to secure approval for ensuing years from the 
participants that had not time-limited their approval.  Specifically, we stated, “If 
the other participants grant unlimited approval, the budget commission should 
enforce their approval and allocate the funds without seeking their reapproval.”  
Id., 86 Ohio St.3d at 143, 712 N.E.2d 719.  Thus, subdivisions can either restrict 
their approval of an alternative method to a given time, or they can grant 
unrestricted approval. 
{¶ 26} In Lancaster, this court reconsidered its earlier suggestion that 
approval of the alternative method was an annual requirement, stating, “Upon 
additional review of the relevant statutes, we are convinced that R.C. 5747.53 and 
R.C. 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 
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disavow dicta in Andover and Girard to the contrary.”  Id., 86 Ohio St.3d at 141, 
712 N.E.2d 719. 
{¶ 27} As a result of Lancaster, it is clear that if an alternative method is 
validly adopted by a budget commission based on unrestricted approvals, it 
remains in effect, and “additional action by the necessary governmental units is 
required only in order to revise, amend, repeal, or adopt a new formula.”  Id., 86 
Ohio St.3d at 142, 712 N.E.2d 719. 
{¶ 28} The specific question presented by this case is whether the budget 
commission’s approval of the alternative methods after the September 1 deadline 
affected the validity of those alternative methods for the ensuing years.  Under the 
facts of this case, the alternative methods for the ULGF and ULGRAF were not 
approved until after the September 1 deadline for their use in distributing the 
funds in the following year.  However, unlike in Girard, neither of the alternative 
methods adopted by the budget commission contained any time limitations 
requiring their distribution to start in a year for which the approval time had 
passed.  While the action of the budget commission was too late to permit use of 
the alternative formula for distributing the ULGF for 1973 or the ULGRAF for 
the second half of 1989 or 1990, the alternative formulas remained valid for fund 
distributions in subsequent years.  Once an alternative method that has no time 
limits is approved, it remains in force for ensuing years until it is revised, 
amended, or repealed pursuant to statute.  Lancaster, 86 Ohio St.3d 137, 712 
N.E.2d 719.  The alternative methods adopted by the budget commission in 1972 
and 1989 remain in force for use in distributing the ULGF and the ULGRAF until 
they are revised, amended, or repealed pursuant to statute.  Therefore, the budget 
commission’s use of the alternative methods to distribute the ULGF and 
ULGRAF for distribution years 1997, 1998, and 2002 was proper. 
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{¶ 29} The appellants also contend that the BTA had no jurisdiction over 
the distribution years 1999, 2000, and 2001 because no appeals were filed with 
the BTA for those years.  We agree. 
{¶ 30} Without deciding whether the BTA’s remand to the budget 
commission to include Reynoldsburg in the alternative formulas was proper, it is 
clear that the budget commission exceeded its authority following the remand.  
Pursuant to the stipulation accepted by the BTA, the budget commission was 
instructed to allocate funds to Reynoldsburg for distribution years 1997 and 1998 
only.  When the budget commission allocated funds for 1999, 2000, and 2001, it 
not only exceeded the terms of the remand order, it acted concerning distribution 
years for which no appeal had been filed with the BTA.  Reynoldsburg did not file 
any notices of appeal with the BTA at the time the budget commission made its 
original allocations for all of the subdivisions in the county for distribution years 
1999, 2000, and 2001. 
{¶ 31} In South Russell v. Geauga Cty. Budget Comm. (1984), 12 Ohio 
St.3d 126, 134, 12 OBR 167, 465 N.E.2d 876, we held that under R.C. 5705.37, 
which governs appeals to the BTA, “the taxing authority of a subdivision must 
file a notice of appeal to the Board of Tax Appeals in each year that an action 
taken by a county budget commission is questioned.”  Reynoldsburg cannot now 
appeal, after the fact, allocations that neither the BTA nor the budget commission 
was authorized to consider.  Timely appeals were filed for distribution years 1997, 
1998, and 2002.  Since no timely appeals were filed for distribution years 1999, 
2000, and 2001, the BTA did not have jurisdiction over Reynoldsburg’s 
challenges to the budget commission’s actions for those years. 
{¶ 32} As a result of our decision, we find it unnecessary to discuss the 
remaining arguments raised by appellants.  However, because the BTA’s decision 
did not address Reynoldsburg’s contention that the budget commission’s method 
of allocation of a share of the funds to Reynoldsburg for distribution years 1997, 
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1998, and 2002 was improper under Buckeye Lake v. Licking Cty. Budget Comm. 
(1986), 21 Ohio St.3d 12, 21 OBR 275, 487 N.E.2d 294, we remand that issue to 
the BTA. 
{¶ 33} The decision of the BTA is unreasonable and unlawful, and, 
therefore, we reverse it and remand the cause for further action consistent with 
this opinion. 
Decision reversed 
and cause remanded. 
 
MOYER, C.J., RESNICK, PFEIFER, LUNDBERG STRATTON and O’DONNELL, 
JJ., concur. 
 
O’CONNOR, J., concurs as to years 1997 and 1998 only. 
__________________ 
 
Rich & Crites & Wesp and James R. Gorry; Robert L. Becker, Licking 
County Prosecuting Attorney, and Dennis Dove, Assistant Prosecuting Attorney, 
for appellants. 
 
Porter, Wright, Morris & Arthur, Nicholas M.J. Ray, Craig R. Carlson, 
and L. Bradfield Hughes; William F. Underwood, Reynoldsburg City Attorney, 
for appellee. 
_____________________