Opinion
Nos. 75-409 and 75-418
Decided July 7, 1976.
Taxation — Counties — Allocation of local government fund — Computation of needs — Additions to budget after filing — Effect — Recomputation by board — Authority — R.C. 5747.51(B).
APPEALS from the Board of Tax Appeals.
On September 6, 1974, the Budget Commission of Geauga County allocated $396,522.55 to various political subdivisions from the undivided local government fund. Of that amount, the commission allocated $25,738.06 to appellant and cross-appellee Chester Township, $16,747.62 to appellant and cross-appellee Russell Township, and $179,718.06 to appellee and cross-appellant Geauga County.
Thereafter, Russell and Chester townships filed appeals with the Board of Tax Appeals, which were consolidated for hearing and disposition. The board, in a de novo proceeding, considered the notices of appeal, the tax budgets of the three political subdivisions, depositions, and testimony and evidence adduced at a hearing before the board.
The board found that the 1975 tax budget of the Geauga County Commissioners, when called for public hearing and filed with the Geauga County Budget Commission, was incomplete and in violation of R.C. 5705.29. The budget did not set out anticipated receipts or proposed expenditures for various special funds, and omitted any statement of anticipated receipts for the special fund of Child Welfare Services. The board discovered that additions to fill many of those omissions had been made to the county's budget after its adoption, public hearing and filing.
The board rejected appellants' contention that in filing an incomplete budget the county had failed to file a budget, thus invoking the sanction contained in R.C. 5705.30. However, relying upon Wise v. Twinsburg (1973), 36 Ohio St.2d 114, the board treated as invalid, and excluded, for purposes of recomputation of the allocation, additions made to the budget after the date of filing.
The last sentence of R.C. 5705.30 provides:
"* * * Any subdivision that fails to submit its budget to the county auditor on or before the twentieth day of July, unless the Board of Tax Appeals on or before the twentieth day of July prescribes a later date for submission of the budget by that subdivision, shall not receive an apportionment from the undivided local government fund distribution for the ensuing calendar year."
The board found that the Geauga County budget was a "deficit budget." The budget projected expenditures of $2,683,205.81, receipts of $2,149,062.47, including $120,000 of local government monies, and a negative balance to begin the year of $37,788.21. The board found that the Geauga County Commissioners had "no plan to raise the $571,931.55 to balance the budget."
The board rejected appellants' contention that the receipt and expenditure of federal revenue sharing funds should be used in calculating allocations of the local government fund, but gave no reason for so holding.
The board failed to pass upon the contention of appellant Chester Township that the general fund of Geauga County included expenditures for permanent improvements which were not deducted as required by R.C. 5747.52.
The board concluded, based upon the foregoing, that "the tax budget procedure used by the Geauga County Commissioners was extremely sloppy and leaves much to be desired and is, in effect, an unrealistic budget." After comparing the county's general fund figures for 1974 with the estimated general fund figures for 1975, the board held that the 25 percent increase reflected in the budget's estimate for 1975 was unreasonable. The board stated that a 15 percent increase would be "a most reasonable increase and would more properly reflect the actual needs of the county." Upon this basis, the board reallocated funds to each of the three subdivisions, granting $140,566.09 to Geauga County, $52,195.66 to Chester Township, and $29,441.99 to Russell Township.
All parties, dissatisfied with this disposition, have appealed to this court.
Messrs. Guston, Shillman Weiss and Mr. David B. Shillman, for appellant and cross-appellee Russell Township.
Arthur T. Wincek Co., L.P.A., and Mr. Arthur T. Wincek, for appellant and cross-appellee Chester Township.
Messrs. Weston, Hurd, Fallon, Paisley Howley and Mr. John M. Baker, for appellee and cross-appellant.
Before passing upon some of the other specific complaints made by the townships in their appeals, and by the county in its own appeal, discussion of the effect of the county budget, incomplete and in imbalance when filed, is in order. Quite clearly, the filing of a partial, incomplete budget circumvents the right of the public to inspect subdivision budgets as provided by R.C. 5705.30, and makes performance of the various duties imposed upon the county budget commission by the applicable statute more difficult. Such failure of the subdivision to file a complete budget is not to be condoned, but the sanction contained in R.C. 5705.30, supra, fn., specifically applies only to the failure of a subdivision to file a budget, and cannot by its language be triggered by failure to complete parts of the prescribed budget forms before filing. Under the facts of this appeal, a budget was filed. Although the budget as filed was in some respects incomplete, much of the omitted information was obtained, verified, and considered by the budget commission before making its allocation of the local government fund.
The evidence provided discloses that the omitted figures were at all times available, capable of ascertainment, and not subject to change. The omitted figures, whether included in the budget in a timely way or not, once obtained, were properly considered by the budget commission in computing needs for the purpose of allocating the local government fund. This decision was not unlawful under Wise v. Twinsburg, supra ( 36 Ohio St.2d 114). That case, cited by the Board of Tax Appeals as authority for its actions, did not decide that the information in the budget, added after the budget was filed, cannot be considered by the commission in allocating the local government fund. Rather, it held that tax levies could not exceed needs as disclosed by the budget.
We conclude that the Board of Tax Appeals erred in excluding the special fund information from its recomputation determining needs for the purpose of allocating the local government fund, to the extent that its order was affected by the omission.
Nor do we see that the so-called deficit budget presented by the county in any way violates statute or case law which concerns allocations of the local government fund. See Cuyahoga v. Budget Comm. (1971), 27 Ohio St.2d 22. Information required by R.C. 5705.29 is furnished in contemplation that any budgeted deficit will be brought into balance by the actions of the budget commission authorized in R.C. 5705.32, 5705.34 and 5705.35, and, in part, by the allocation of the county individual local government fund under R.C. 5747.51. It should be noted that the latter section and applicable case law specifically authorize the commission to adjust claimed need to reflect actual need, as was done herein by the Board of Tax Appeals in its de novo hearing. Brook Park v. Budget Comm. (1968), 16 Ohio St.2d 119; Bd. of Co. Commrs. v. Willougby Hills (1968), 14 Ohio St.2d 163.
Although appellant Chester complains that the county's budget includes estimated expenditures for permanent improvements which were not taken into account by the board, the record discloses no evidence compelling a finding that any of the items asserted to be permanent improvements had a life or usefulness as required by R.C. 5705.01(E). Hence, the board's failure to address appellant's complaint in this respect does not render its order unreasonable or unlawful.
We conclude that federal revenue sharing funds were properly excluded by the board from its computation of needs of the appellants. Those who are entitled to participate in any appropriation or revenues of a subdivision or taxing unit are not required by R.C. 5705.28, or by any form prescribed by the bureau of supervision of public officers, to include such funds in estimates to be filed under that statute.
The reduction by the board of Geauga County's increase in estimated general fund figures of 1975 by 40 percent was based upon a conclusion by the board that the stated needs reflected an exaggerated increase from 1974, overstating the effect of inflationary forces. That reduction was a discretionary act of the board specifically authorized by the following language in R.C. 5747.51(B):
"* * * Nothing in this section prevents the budget commission [or the Board of Tax Appeals upon de novo hearing], for the purpose of apportioning the undivided local government fund, from inquiring into the claimed needs of any subdivision as stated in its tax budget, or from adjusting claimed needs to reflect actual needs. * * *"
Such adjustments made or approved by the board will not be disturbed by this court unless it appears that an abuse of discretion has occurred. In Bd. of Co. Commrs. of Clark County v. Budget Comm. (1946), 146 Ohio St. 636, at page 641, we stated:
"* * * This court will not determine anew the needs of these subdivisions and, if the amount fixed by the Board of Tax Appeals is reasonable, its factual finding will not be disturbed here on the ground that a different finding as to amount might comport more nearly with the court's idea of the respective needs of the subdivisions. * * *"
Cross-appellant charges that use by the board of estimated figures and values, utilizing the estimated year-end balance from Chester Township and, allegedly, the actual year-end balance of Russell Township, in computing needs for the purpose of the allocation, is inconsistent and unlawful.
We do not conceive, however, that any flat rule need be made requiring the board to use year-end actual balances to the exclusion of estimated figures in arriving at the recomputation necessary for its de novo allocation of the local government fund, or to use only estimated figures. This court, in Bd. of Co. Commrs. of Clark County v. Budget Comm., supra, at pages 640-641, stated:
"* * * the fact that the Board of Tax appeals received in evidence these different factual matters did not make its decision unlawful, nor does it necessarily follow that because a revised budget request or estimate of expenditures was received in evidence the decision is unlawful. In proper cases such revised requests or estimates may be received, otherwise mistaken or obviously wrong estimates could not be corrected. * * * What weight should have been given to the revised estimates submitted by the city of Springfield was a matter for the determination of the Board of Tax Appeals in the exercise of its discretion."
In Brook Park v. Budget Comm., supra ( 16 Ohio St.2d 119), at paragraph three of the syllabus, we said:
"Upon an appeal to the Board of Tax Appeals from an allocation of the undivided local government fund by a county budget commission among the various political subdivisions of the county, the board may consider actual receipts and expenditures which occurred after the submission of the tax budgets to, and after the date of hearing before, the budget commission, to accurately determine the actual needs of the various political subdivisions entitled to participate in such funds for the year involved. * * *" (Emphasis added.)
Each of these cases points to the fact that the board, in a de novo hearing, may receive estimates or actual year-end figures, and, as in all other cases, fashion therefrom a decision both reasonable and lawful.
The enactment of R.C. 5747.51 and 5747.52 (and particularly item 11 of the latter statute) subsequent to the Brook Park v. Budget Comm. case, supra, does not demonstrate, as argued by the appellant Chester, an intention of the legislature to reverse our holding in that case. The statutory purpose of the language was to authorize the budget commission's use of estimates, and not, in a proper case, as was stated in Bd. of Co. Commrs. of Clark Co. v. Budget Comm., supra, to exclude from the board's consideration evidence tending to prove that estimates used by the budget commission are mistakes or obviously wrong. What is required upon de novo hearing is that all available evidence be considered, and that the decision be not unreasonable in light thereof.
Since some reconsideration and recomputation of the allocations here on appeal are needed, the cause is reversed and remanded to the board for further proceedings not inconsistent with this opinion.
Decisions reversed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, W. BROWN and P. BROWN, JJ., concur.
In my opinion the majority herein ignores the decision in Cleveland v. Budget Comm. (1976), 47 Ohio St.2d 27, decided this date, and for that reason, I am constrained to add the following comments:
In Cleveland, the court, in reversing the decision of the Board of Tax Appeals, stated that:
"* * * The board has the duty to determine the allocation of the local government fund de novo, not simply to affirm or reverse the decision of the county budget commission. * * * That allocation must be based upon some ascertainable and reasonable standard and upon the evidence presented. [Citations omitted.]
"Because the opinion of the board fails to set out adequate reasons, supported by evidence, for its finding that a 22 percent increase in Cleveland's expenditures accurately reflects the city's actual needs, the decision of the board is reversed and the cause remanded for further proceedings in conformity with this opinion."
The same result should obtain in the instant cause, because the board's conclusional statement that "a 15% increase in proposed general fund expenditures for the county for 1975 would be a most reasonable increase and would more properly reflect the actual needs of the county" is insufficient in light of the requirement, in Cleveland, that the opinion of the board "set out adequate reasons, supported by evidence, for its finding * * *."
For the foregoing reason, I concur in the judgment of reversal.