Girard v. Trumbull Cty. Budget Comm. - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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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repealed in the manner provided in Section 5747.53, Ohio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2000 unless this Resolution is revised, amended or repealed in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.