Girard v. Trumbull Cty. Budget Comm.

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City of Girard et al., Appellees, v. Trumbull County Budget

Commission et al., Appellants.

[Cite as Girard v. Trumbull Cty. Budget Comm. (1994), Ohio

St.3d .]

Taxation -- Allocation of undivided local government fund --

Trumbull County Budget Commission may not allocate and

apportion the undivided local government fund and

undivided local government revenue assistance fund in 1992

according to the alternate formula adopted on October 1,

1990 but must use the formula properly adopted in 1983.

(No. 93-1251 -- Submitted May 17, 1994 -- Decided

September 7, 1994.)

Appeal from the Board of Tax Appeals, No. 91-K-1413.

In 1983, the appellant Trumbull County Budget Commission

("commission") adopted a resolution providing for the

apportionment of the Trumbull County undivided local government

fund ("LGF") "for years 1984 through 1990, inclusive (and also

for years subsequent thereto unless revised, amended or

repealed in the manner provided in Section 5747.53, Ohio

Revised Code)." The resolution set forth a method of

apportionment of the LGF as an alternative to the "statutory

formula" set forth in R.C. 5747.51 and 5747.52.

In 1989, the commission also adopted an alternative method

of apportionment for the Trumbull County undivided local

government revenue assistance fund ("LGRAF") "using the same

percentage of distribution as for the [LGF] for the years 1989

and 1990 inclusive."

On October 1, 1990, the commission adopted a resolution

which was intended to replace the resolution adopted in 1983.

This resolution provided for alternative methods of

apportioning the Trumbull County LGF and LGRAF "for the years

1991 through 2000, inclusive *** [and] subsequent to the year

2000 unless this Resolution is revised, amended or repealed in

the manner provided in Section 5747.53 and Section 5747.63,

Ohio Revised Code."

Thereafter, the commission allocated the LGF and the LGRAF

for 1991 pursuant to the alternative methods adopted on October

1, 1990. Appellees, the cities of Girard, Hubbard and Niles,

appealed the 1991 allocations to the Board of Tax Appeals

("BTA"). Those appeals (case Nos. 90-E-1482, 90-E-1494 and

90-J-1493) were consolidated and eventually dismissed by the

BTA for lack of jurisdiction.

Prior to making apportionments for 1992, the commission,

on August 7, 1991, sent a letter to each appellee informing it,

respectively, of the amounts allocated from the LGF and LGRAF

"to your Subdivision for the calendar year 1992." (Emphasis

added.) This letter was received by Girard and Niles on August

12 and by Hubbard on August 13, 1991. On September 17, 1991,

the commission issued an Official Certificate of Estimated

Resources ("official certificate") to each appellee for the

budget year beginning January 1, 1992. The official

certificates were received by appellees on September 26, 1991.

On October 25, 1991, appellees filed their notice of

appeal from the 1992 allocations with the BTA. They alleged

that the alternative formulas set forth in the October 1, 1990

resolution were improperly adopted "thirty days after the

statutory deadline of September 1, 1990."

The BTA agreed and reversed and remanded the cause to the

commission "to allocate the 1992 LGF and LGRAF pursuant to the

alternate formula properly adopted in 1983."

The cause is now before this court upon an appeal as of

right by appellants commission and Bazetta Township et al.

Dragelevich & Blair and J. Walter Dragelevich, for appellees.

Dennis Watkins, Trumbull County Prosecuting Attorney,

James J. Misocky, Chief Counsel, and Patrick F. McCarthy,

Assistant Prosecuting Attorney, for appellants.

Alice Robie Resnick, J. The broad issue in this case is

whether the commission may allocate and apportion the LGF and

LGRAF in 1992 according to the alternative formula adopted on

October 1, 1990. In determining this issue, we must address

three contentions raised by appellants: (1) that appellees'

appeal to the BTA filed on October 25, 1991, was untimely; (2)

that a multi-year alternative formula for apportioning the LGF

and LGRAF, adopted beyond the statutory deadline of September 1

for the year of its intended inception, is effective and

applicable in subsequent years; and (3) that in failing to

successfully appeal the October 1, 1990 adoption of the

alternative formula to the BTA for the 1991 allocations,

appellees waived their right to attack any procedural

deficiencies in the adopting process in their appeal of the

1992 allocations.

I

We will first consider appellants' contention that

appellees untimely appealed the 1992 allocations to the BTA.

It is appellants' position that when appellees received the

commission's letter dated August 7, 1991, they had thirty days

from that time in which to perfect their appeal. Under R.C.

5705.37, an appeal must be perfected within thirty days of

receiving either the official certificate or notice, whichever

occurs first. Notice is defined in R.C. 5747.51(J). The

letter of August 7 was in "substantial compliance" with R.C.

5747.51(J), appellants argue, because it "alerted the

subdivision as to their allocation under the formula." Thus,

since this letter was received by appellees, respectively, on

August 12 and August 13, 1991, their appeal filed with the BTA

on October 25, 1991 was untimely.

We construe appellants' contention as a motion to dismiss

for lack of subject-matter jurisdiction, which we deny.

R.C. 5705.37 provides, in relevant part, that:

"The taxing authority of any subdivision that is

dissatisfied with any action of the county budget commission

may, through its fiscal officer, appeal to the board of tax

appeals within thirty days after the receipt by the subdivision

of the official certificate or notice of the commission's

action."

In Budget Comm. of Brown Cty. v. Georgetown (1986), 24

Ohio St.3d 33, 24 OBR 76, 492 N.E.2d 826, at the syllabus, we

construed this language as follows:

"Pursuant to the express terms of R.C. 5705.37, the

permissible time in which to perfect an appeal to the Board of

Tax Appeals may be triggered by a subdivision's receipt of

either the official certificate as set forth in R.C. 5705.37 or

by receipt of notice as defined in R.C. 5747.51(J)."

Since appellants' appeal of the 1992 allocations was

perfected within thirty days of receiving the official

certificates but not within thirty days of receiving the

commission's letter dated August 7, 1991, the determinative

question is whether this letter constitutes "notice" as defined

in R.C. 5747.51(J).

The relevant portion of R.C. 5747.51(J) provides that:

"Within ten days after the budget commission has made its

apportionment, whether conducted pursuant to section 5747.51 or

5747.53 of the Revised Code, the auditor shall publish a list

of the subdivisions and the amount each is to receive from the

undivided local government fund and the percentage share of

each subdivision, in a newspaper or newspapers of countywide

circulation, and send a copy of such allocation to the tax

commissioner.

"The county auditor shall also send by certified mail,

return receipt requested, a copy of such allocation to the

fiscal officer of each subdivision entitled to participate in

the allocation of the undivided local government fund of the

county. This copy shall constitute the official notice of the

commission action referred to in section 5705.37 of the Revised

Code." (Emphasis added.)

R.C. 5747.62(I) contains the same operative language

applicable to LGRAF allocations.

The notice that is necessary to trigger the permissible

time in which to perfect an appeal under R.C. 5705.37 is

defined in R.C. 5747.51(J) and 5747.62(I) as a copy of the

allocation required to be published and sent to the Tax

Commissioner. Such allocation must include a list of the

subdivisions, and the amount and percentage share that each

subdivision is to receive from the fund being apportioned.

Notice is required under these sections regardless of whether

the statutory formula or an authorized alternative formula is

utilized for the apportionment.

Neither R.C. 5747.51(J) nor 5747.62(I) provides for an

alternative method in lieu of compliance with its mandatory

notice requirements. Since the commission's letter dated

August 7, 1991, did not include a copy of the allocation

specified as constituting notice under R.C. 5747.51(J), it did

not trigger the appeal time under R.C. 5705.37 with respect to

the LGF apportionment. Similarly, since the commission's

letter also failed to include a copy of the allocation

specified as constituting notice under R.C. 5747.62(I), it did

not trigger the appeal time under R.C. 5705.37 with respect to

the LGRAF apportionment. Further, even if we were to recognize

that "substantial compliance" with the notice requirements of

R.C. 5747.51(J) and/or 5747.62(I) could trigger the appeal time

under R.C. 5705.37, such did not occur by virtue of the

commission's August 7 letter. That letter did nothing more

than apprise each subdivision of its own respective numerical

share of each fund.

Accordingly, we find appellants' contention to be without

merit.

II

Appellants' principal contention is that the alternative

formula adopted on October 1, 1990 "for the years 1991 through

2000," even though adopted beyond September 1, 1990, is

nevertheless viable for 1992. They argue that since the

alternative formula was adopted before the September 1, 1991

deadline for the 1992 allocations, "no subdivision was

prejudiced by the apparent untimeliness." Since the intent of

adopting the alternative formula was to provide for a

multi-year method of distribution, the untimely adoption in the

first year should not serve to thwart "the intent of the

subdivisions to utilize said formula in subsequent years." We

disagree.

The LGF and the LGRAF were created as "a form of financial

state support of the smaller governmental units existing in

Ohio." Andover Twp. v. Ashtabula Cty. Budget Comm. (1977), 49

Ohio St.2d 171, 173, 3 O.O.3d 238, 239, 360 N.E.2d 690, 691.

They consist of state-collected tax money credited under

various provisions of the Revised Code. R.C. 5725.24, 5727.45,

5733.12, 5739.21, 5741.03, 5747.03 and 5747.61. Such funds are

designed "to assist the county and its subdivisions in their

current operations." Canton v. Stark Cty. Budget Comm. (1988),

40 Ohio St.3d 243, 533 N.E.2d 308, 309. "These funds are

transferred by the state auditor to the several counties for

distribution to the local subdivisions." Andover, supra, at

173-174, 3 O.O.3d at 239, 360 N.E.2d at 691.

It is the responsibility of each county's budget

commission to determine the amount of each fund "needed by and

to be apportioned to each subdivision for current operating

expenses." R.C. 5747.51(B) and 5747.62(B). Both of these

sections provide that this determination shall be made pursuant

to the respective statutory formulas set forth therein, "unless

the commission has provided" for an alternative formula. Under

R.C. 5747.53(A) and 5747.63(A), "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 governmental units

***."

R.C. 5705.27 provides, in pertinent part, that the

commission "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." In

Shawnee Twp. v. Allen Cty. Budget Comm. (1991), 58 Ohio St.3d

14, 16, 567 N.E.2d 1007, 1010, we explained that the effect of

failing to adopt an alternative formula by September 1 is to

render the alternative formula nonexistent for the next year's

allocations. As the court of appeals explained in Englewood v.

Montgomery Cty. Budget Comm. (1987), 39 Ohio App.3d 153, 155,

530 N.E.2d 924, 926-927:

"R.C. 5705.27 succinctly sets forth, in mandatory

language, that a budget commission shall complete its work on

or before September first of each year unless an extension is

granted by the Tax Commissioner. If no extension is granted,

the budget commission must be prepared to invoke an alternate

formula approved prior to September first, pursuant to R.C.

5747.53, or the statutory formula, set forth in R.C. 5747.51,

comes into effect by operation of law.

"***

"Thus, a budget commission may adopt an alternate formula

in lieu of the statutory method of distribution if the

alternate formula is approved and ready to be implemented by

the September first deadline." (Emphasis sic.)

Appellants seek to distinguish the case sub judice from

Shawnee Twp. and Englewood on two grounds. The first ground,

appellants assert, is that none of the participating

subdivisions in this case suffered any prejudice, since "there

was no delay in the receipt of LGF fund [sic] and LGRAF funds

[sic] for the year 1992."

In support of their assertion, appellants rely exclusively

on Troy v. Miami Cty. (1959), 168 Ohio St. 418, 7 O.O.2d 258,

155 N.E.2d 909. In Troy, this court stated that the time

limitation placed on the commission by R.C. 5705.27 to complete

its work by September 1 was directory and not mandatory, "'at

least where the rights of no person or class of persons would

be prejudiced by the delay.'" Id. at 430, 7 O.O.2d at 265, 155

N.E.2d at 916. This discussion, however, took place within the

context of a situation that is sui generis and should not be

understood as having any precedential value beyond that

situation.

The situation in Troy involved amendments to R.C. 5739.23

which were not effective until September 16, 1957. Contained

within those amendments was the language regarding the time and

manner of apportioning the LGF. On January 16, 1958, the

commission allocated the 1958 LGF in accordance with the

formula prescribed in the amendments. This court upheld the

commission's action notwithstanding R.C. 5705.27, finding that

amended R.C. 5739.23 was applicable to distributions made in

1958. In so doing, it was noted that amended R.C. 5739.23 was

not effective until after the date established by R.C. 5705.27

for the commission to complete its work. In order to give a

prospective operation to amended R.C. 5739.23, it was necessary

to find R.C. 5705.27's time prescription inapplicable. Thus,

we stated that "'[a]ll enactments imposing duties impossible of

performance within the stipulated time have been declared

directory.'" Id. at 430, 7 O.O.2d at 265, 155 N.E.2d at 916.

The holding in Troy, therefore, is limited to the first

year in which a prospective statutory provision for allocating

funds is enacted with an effective date subsequent to September

1.

The second ground on which appellants seek to distinguish

Shawnee Twp. and Englewood is that those cases "do not directly

address the issues involving a multiple year, alternate

formula." Under appellants' view, a multi-year alternative

formula, which is invalidly adopted beyond the September 1

deadline in the year of its intended inception, is simply

postponed until the following year.

Appellants misconstrue the import of failing to adopt an

alternative formula by the September 1 deadline. The deadline

is a statutory precondition to the existence of a purported

alternative method of allocation, regardless of its intended

longevity. As the BTA aptly explained, were we to find that a

multi-year alternative formula, untimely adopted, could become

effective in the year following its intended inception "without

any further action by [the] county budget commission, the

objectives of the participating subdivisions for the first

year, which is clearly invalid, could be frustrated." 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,

supra, at 174, 3 O.O.3d at 239, 360 N.E.2d at 692. 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 statutory scheme implies an annual determination of the

method of distribution." Id. at 175, 3 O.O.3d at 240, 360

N.E.2d at 692.

Accordingly, we find the alternative methods of

apportioning the LGF and LGRAF adopted by the commission on

October 1, 1990, to be invalid. Since those methods never came

into existence, they cannot be utilized in apportioning the LGF

and LGRAF in 1992 or thereafter.

III

Appellants' final contention is that any errors in the

adopting process were waived by appellees "in their failure to

raise them in their 1990 appeal to [the BTA]."

The doctrine of res judicata, whether claim preclusion or

issue preclusion, may, under appropriate circumstances, be

applied to decisions rendered by administrative bodies such as

the BTA. See Set Product, Inc. v. Bainbridge Twp. Bd. of

Zoning Appeals (1987), 31 Ohio St.3d 260, 31 OBR 463, 510

N.E.2d 373; Superior's Brand Meats, Inc. v. Lindley (1980), 62

Ohio St.2d 133, 16 O.O.3d 150, 403 N.E.2d 996.

In S. Russell v. Geauga Cty. Budget Comm. (1984), 12 Ohio

St.3d 126, 134, 12 OBR 167, 174, 465 N.E.2d 876, 883, however,

we held that "pursuant to R.C. 5705.37, 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." It would be inconsistent with this

holding to apply claim preclusion to defeat appeals filed in

successive years pursuant to R.C. 5705.37.

On the other hand, issue preclusion, or collateral

estoppel, precludes the relitigation of an issue or issues

"that have been actually and necessarily litigated and

determined in a prior action." Goodson v. McDonough Power

Equip., Inc. (1983), 2 Ohio St.3d 193, 195, 2 OBR 732, 734, 443

N.E.2d 978, 981. See, also, Krahn v. Kinney (1989), 43 Ohio

St.3d 103, 107, 538 N.E.2d 1058, 1062. A ruling by a tribunal,

however, that it lacks jurisdiction is not a ruling on the

merits of the claim and has no res judicata effect. State ex

rel. Schneider v. N. Olmsted Bd. of Edn. (1988), 39 Ohio St.3d

281, 530 N.E.2d 206; Gibson v. Summers Constr. Co. (1955), 163

Ohio St. 220, 56 O.O. 223, 126 N.E.2d 326, paragraph three of

the syllabus. See, also, Annotation, Res Judicata Effect of

Judgment Dismissing Action, or Otherwise Denying Relief, for

Lack of Jurisdiction or Venue (1956), 49 A.L.R.2d 1036. Such a

ruling by its nature precludes any further inquiry into the

issues comprising the merits of the claim.

Appellants do not contend, and the record does not reveal,

that the issue of the untimely adoption of the alternative

formula on October 1, 1990 was "actually and necessarily

litigated and determined" in the consolidated appeal to the BTA

from the 1991 allocations. Instead, appellants have stipulated

that that case "was dismissed for lack of jurisdiction."

Accordingly, we find appellants' third contention to be without

merit.

In light of the foregoing, we affirm the decision of the

Board of Tax Appeals.

Decision affirmed.

Moyer, C.J., A.W. Sweeney, Douglas, F.E. Sweeney and

Pfeifer, JJ., concur.

Wright, J., dissents.

Wright, J., dissenting. In my view, the majority

incorrectly holds that res judicata does not bar the instant

litigation. The majority errs when it points to the BTA's

dismissal of the 1991 appeals as the operative decision. I

believe that appellees' failure to oppose the adoption of the

alternative formulas at the October 1, 1990 budget commission

hearing on the ground that the hearing occurred beyond when the

commission was to complete its work bars, under res judicata,

the instant appeals. Consequently, I respectfully dissent.

The commission had been allocating these funds under the

formula adopted in 1983. In 1990, the commission began

proceedings to replace this formula. After several meetings

and approval by the requisite subdivisions, the commission, at

its hearing on October 1, 1990 attended by two of the

appellees, adopted the new alternative formulas. At this

hearing, the commission voted to allocate for 1991 under these

formulas.

Appellees appealed the 1991 LGF and LGRAF allocations to

the BTA. However, on a motion by the commission, the BTA

dismissed the appeals, because the cities had not filed copies

of the notices of appeal with the budget commission, as

required under R.C. 5705.37. In these appeals, appellees,

inter alia, challenged the adoption of the alternative formulas.

The commission then allocated the 1992 LGF and LGRAF under

the 1990 formulas, and appellees, again, appealed the

allocations to the BTA.

According to Krahn v. Kinney (1989), 43 Ohio St.3d 103,

538 N.E.2d 1058, res judicata includes collateral estoppel, or

issue preclusion. Krahn at 107, 538 N.E.2d at 1062, declares

the effect of this principle:

"Collateral estoppel precludes the relitigation of an

issue that has been 'actually and necessarily litigated and

determined in a prior action.' Goodson v. McDonough Power

Equipment, Inc. (1983), 2 Ohio St.3d 193, 195, 2 OBR 732, 734,

443 N.E.2d 978, 981, citing Whitehead [v. Gen. Tel. Co. (1969),

20 Ohio St. 2d 108, 49 O.O. 2d 435, 254 N.E.2d 10] ***."

In Superior's Brand Meats, Inc. v. Lindley (1980), 62 Ohio

St.2d 133, 16 O.O. 3d 150, 403 N.E. 2d 996, syllabus, we

applied collateral estoppel to administrative proceedings:

"Ordinarily, where an administrative proceeding is of a

judicial nature and where the parties have had an ample

opportunity to litigate the issues involved in the proceeding,

the doctrine of collateral estoppel may be used to bar

litigation of issues in a second administrative proceeding."

The Superior's Brand court held that the BTA acted in a

judicial capacity because it issued notice, held a hearing, and

afforded an opportunity for the introduction of evidence.

In Set Products, Inc. v. Bainbridge Twp. Bd. of Zoning

Appeals (1987), 31 Ohio St.3d 260, 31 OBR 463, 510 N.E. 2d 373,

we applied res judicata to a decision of a township board of

zoning appeals. In that case, Best Silica Company applied to

the zoning board for transfer of a variance from Set Products

to it and for a longer extension of the existing variance. The

zoning board granted the transfer but denied the extension.

This decision was not appealed.

One month later, Best Silica, Set Products, and H & R

Investment Co. applied for a variance to last the entire useful

life of the property. The zoning board ruled that the earlier

decision barred the new application under res judicata. On

appeal, the court of common pleas affirmed the board's

decision, but the court of appeals reversed the common pleas

court ruling and granted the variance.

We held that the zoning board must permit an applicant to

present evidence in support of a variance claim and that the

board's grant or denial of a variance is an exercise of a

quasi-judicial power. Thus, we reasoned, the board proceeding

was of a judicial nature and the parties had an ample

opportunity to litigate the issues involved in the proceeding.

Consequently, "[a]s the board's decision was not appealed, it

became a final judgment on the merits, whether or not

erroneous, and was res judicata to identical future

applications. ***" Id. at 263, 31 OBR at 465, 510 N.E.2d at

377.

In the instant case, R.C. 5747.51 and 5747.62 authorize

the budget commission to allocate these funds. According to

division (B) of each statute: "*** The commission, after

extending to the representatives of each subdivision an

opportunity to be heard, under oath administered by any member

of the commission, and considering all the facts and

information presented to it by the auditor, shall determine the

amount of the undivided local government [and local government

revenue assistance] fund[s] needed by and to be apportioned to

each subdivision for current operating expenses, as shown on

the tax budget of the subdivision."

The budget commission's 1990 proceeding was of a judicial

nature, and the appellees had ample opportunity to litigate

whether the commission timely adopted the 1990 formulas.

Representatives of two of the appellees attended the October 1

hearing and heard the county prosecutor, a member of the

commission, state that proper procedure had been followed in

accomplishing an agreeable alternative method to apportion the

funds. During this hearing, these appellees could have

objected to the untimeliness of the commission's adoption of

the formulas, since the commission conducted the hearing one

month beyond when R.C. 5705.27 commanded the commission to

complete its work. Indeed, Girard's attorney and Niles' mayor

appeared at this hearing to express each city's objection to

the formula.

Thus, this hearing presented the appellees with the

opportunity to object to the untimeliness of adopting the

formulas. Consequently, the commission's decision, not being

successfully appealed, "became a final judgment on the merits,

whether or not erroneous, and was res judicata to identical

future applications." Set Products, supra, 31 Ohio St.3d at

263, 31 OBR at 465, 510 N.E.2d at 377.