High court's ruling favors commission

When an alternative funding formula is OK'd, no prior hearing is needed to adopt it, the court ruled.
By MICHELE C. HLADIK
VINDICATOR CORRESPONDENT
COLUMBUS -- The Columbiana County Budget Commission did not overstep its bounds when it used an alternative method of divvying up local government funds without conducting a formal hearing, the Ohio Supreme Court said.
In a unanimous decision released Wednesday, the court said counties which properly adopted an alternative method of allocating its share of state Undivided Local Government Fund (ULGF) and Undivided Local Government Revenue Assistance Fund (ULGRAF) dollars rather than using the "statutory method" are not required to grant political subdivisions "an opportunity to be heard under oath."
"The statutory method specified by [Ohio Revised Code] requires a county budget commission to afford political subdivisions an 'opportunity to be heard, under oath,' before allocating ULGF and ULGRAF dollars because those statutes contemplate a needs-based allocation," wrote Justice Terrence O'Donnell.
"The alternative method under [Ohio Revised Code], however, does not require the budget commission to afford political subdivisions an opportunity to be heard under oath before allocating ULGF and ULGRAF dollars, because those statutes only require the county board of commissioners and the appropriate political subdivisions to approve the alternative formula before it is adopted by the budget commission.
"Accordingly, when the commission and the county's political subdivisions have already approved an alternative formula, the statutes do not require the commission to provide a hearing prior to adopting an alternative formula."
The decision stems from a dispute between the budget commission and the city of East Liverpool.
The commission, using the alternate method, reduced the amount of those funds the city received in 2002-03. The city objected to receiving the cuts without a formal hearing.
Columbus lawyer John Varanese represented the city at oral arguments before the high court in January.
Varanese argued the commission abused its discretion in adopting the new formula without allowing the city to provide evidence on the negative effects of a cut in its share of the funds.
He said the city was prepared to see cuts but believes it was "singled out" as the only subdivision to receive a reduction with the new formula.
Varanese said the cuts reduced general-fund revenues by 17 percent. The city also experienced a 9-percent reduction in other general revenue sources at the same time.
He said the city was asking the high court to require the commission to return to the method of funding established in 1990.
According to Justice O'Donnell, the Board of Tax Appeals found that the 2003 alternative formula adopted by the county in August 2002 was fair and impartial.
He wrote that "nothing contained in the record before us contradicts that conclusion, the budget commission did not abuse its discretion."
Akron attorney Stephen Funk represented the commission during oral arguments. Funk told the high court that under Ohio statute the budget commission was not required to have a need-based hearing for alternate funding methods.
He also pointed to past state Supreme Court decisions that have said it is not an abuse of discretion to use alternate funding method formulas.
The court also upheld the Board of Tax Appeals decision that the county adopted the alternate method in the appropriate time frame.
Counties were given a special one-time deadline extension to both repeal their current allocation ordinances requiring largest-city approval and adopt a new alternative formula for the 2003 tax year.
"The General Assembly originally set the same deadline for both actions," wrote Justice O'Donnell. "As the Board of Tax Appeals pointed out, it is therefore reasonable to conclude that the General Assembly intended the single-time extension to apply to all actions required to adopt an alternative method."