City of Riverside v. State
Citation | 64 N.E.3d 504 |
Decision Date | 06 May 2016 |
Docket Number | No. 26840.,26840. |
Parties | CITY OF RIVERSIDE, Plaintiff–Appellant v. STATE of Ohio, Defendant–Appellee. |
Court | Ohio Court of Appeals |
Daniel J. Buckley, and Adam C. Sherman, and Jacob D. Mahle, and Jessica K. Baverman, Cincinnati, OH, for Plaintiff–Appellant.
Zachery Keller, and Nicole M. Koppitch, and Brodi J. Conover, Assistant Attorneys General, Columbus, OH, for Defendant–Appellee.
{¶ 1} The City of Riverside appeals from a judgment of the Montgomery County Court of Common Pleas, which granted the State's motion for summary judgment, denied Riverside's motion for summary judgment, and dismissed Riverside's case. The parties' disagreement, in general, and their motions for summary judgment, in particular, concerned the constitutionality of a statute creating an exemption from municipal income tax, which was enacted in 2007. The dispute related to employees and contractors who work at Wright Patterson Air Force Base (WPAFB), some parts of which are located in Riverside.
{¶ 2} As a preliminary matter, we note that the parties and the trial court consistently refer to the disputed statutory section as R.C. 718.01(H)(11). The current R.C. 718.01(H), which is in the "Definitions" section of R.C. Chapter 718, Municipal Income Taxes, states, in its entirety: " ‘Schedule F’ means internal revenue service schedule F (form 1040) filed by a taxpayer pursuant to the Internal Revenue Code"; it does not contain any subsections, not does it specifically address an exception to the municipal commuter income tax. R.C. 718.01 and other statutes governing income taxes imposed by municipal corporations were "amend[ed], for the purpose of adopting a new section number * * *, to enact new sections * * *, and to repeal [former] sections * * * " by Am.Sub.H.B. 5 in 2014. Although Am.Sub.H.B. 5 does not explicitly state how the statutes, including R.C. 718.01, were reorganized and renumbered, the provision at issue in this appeal now appears at R.C. 718.01(C)(13). We will refer to it as such, except when quoting from the trial court's decision.
{¶ 3} The trial court's judgment contains a helpful overview of the history of this case:
Decision, Order, and Entry (August 19, 2015).
{¶ 4} In June 2007, the Ohio General Assembly passed R.C. 718.01(F)(11), which was later recodified as R.C. 718.01(H)(11) and then R.C. 718.01(C)(13), with some minor changes not relevant to this appeal.
{¶ 5} R.C. 718.01(C)(13), the "Definitions" section of R.C. Chapter 718, Municipal Income Taxes, states that "exempt income" includes:
(13) Compensation paid to a person employed within the boundaries of a United States air force base under the jurisdiction of the United States air force that is used for the housing of members of the United States air force and is a center for air force operations, unless the person is subject to taxation because of residence or domicile. If the compensation is subject to taxation because of residence or domicile, tax on such income shall be payable only to the municipal corporation of residence or domicile.
The definition of "municipal taxable income" excludes "exempt income." R.C. 718.01(A)(1).
{¶ 6} As a result of R.C. 718.01(C)(13), employees and contractors presently working at a portion of WPAFB that is within Riverside qualify for an exemption from paying municipal income tax, unless they also live in Riverside.
{¶ 7} The trial court stated as follows:
On August 8, 2013, Plaintiff, City of Riverside, filed its Complaint for Declaratory Judgment and Injunctive Relief against Defendant, State of Ohio, seeking a declaration that R.C. 718.01(H)(11) [now R.C. 718.01(C)(13) ] violates the Equal Protection Clause of the United States Constitution and the Ohio Constitution, and seeking an entry of permanent injunction prohibiting enforcement of the subject statute. In its Complaint, Riverside alleged that it began to levy its municipal income tax on civilian employees and contractors who were employed at Wright Patterson Air Force Base (WPAFB) and who worked or lived on portions of the WPAFB located within Riverside's city limits. The tax was imposed by Riverside allegedly for the purpose of providing funds for general municipal operations, maintenance, new equipment, extension and enlargement of municipal services and facilities, and capital improvements. According to Riverside, after it began levying the tax, the Ohio General Assembly enacted R.C. 718.01(F)(11), later codified as R.C. 718.01(H)(11), as an amendment to the biennial budget bill. Riverside alleged that R.C. 718.01(H)(11) [now R.C. 718.01(C)(13) ] discriminatorily prohibits municipal assessment of income taxes on certain civilian employees and contractors who work within Riverside on the grounds of a narrowly-defined type of air force base, and, thus, is unconstitutional because it violates the Equal Protection Clauses of both the United States Constitution and the Ohio Constitution.
Decision, Order, and Entry (August 19, 2015).
{¶ 8} Each of the parties (Riverside and the State of Ohio) filed a motion for summary judgment on April 15, 2015. On August 19, 2015, the trial court granted the State's motion, denied Riverside's motion, and dismissed the case.
{¶ 9} Riverside appeals, raising two assignments of error. The first assignment addresses three discovery issues on which the trial court ruled before entering summary judgment, as well as an argument that R.C. 718.01(C)(13) violates the Equal Protection Clauses. The second assignment asserts that the trial court "appl[ied] the incorrect summary judgment standard."
{¶ 10} We will begin our analysis with Riverside's equal protection arguments under its first assignment of error.
{¶ 11} Riverside contends that the trial court "misapplied rational basis review" in concluding that the municipal income tax exemption created by R.C. 718.01(C)(13) does not violate the Equal Protection Clauses of the United States and Ohio Constitutions. It asserts that there "is no evidence" of a legitimate state interest to which the statute is rationally related. Riverside claims that three classes of Ohio citizens are adversely affected by the exemption: 1) Riverside residents, 2) individuals who are not Riverside residents but who work within Riverside on premises other than WPAFB (and therefore pay the commuter income tax), and 3) federal employees who work somewhere in Riverside other than WPAFB. Riverside's standing to raise these issues was addressed in a prior Opinion of this court, Riverside v. Ohio, 2d Dist. Montgomery No. 26024, 2014-Ohio-1974, 2014 WL 1887714, and resolved in Riverside's favor.
{¶ 12} "[S]tatutes are presumed to be constitutional and * * * courts have a duty to liberally construe statutes in order to save them from constitutional infirmities." Pickaway Cty. Skilled Gaming, LLC v. Cordray, 127 Ohio St.3d 104, 2010-Ohio-4908, 936 N.E.2d 944, ¶ 20, quoting Eppley v. Tri–Valley Local School Dist. Bd. of Edn., 122 Ohio St.3d 56, 2009-Ohio-1970, 908 N.E.2d 401, ¶ 12. The party challenging the constitutionality of a statute "bears the burden to negate every conceivable basis that might support the legislation." Id., citing Columbia Gas Transm. Corp. v. Levin, 117 Ohio St.3d 122, 2008-Ohio-511, 882 N.E.2d 400, ¶ 91.
{¶ 13} The federal and Ohio equal protection provisions are "functionally equivalent" and "are to be construed and analyzed identically." Id. at ¶ 17, citing State v. Williams, 126 Ohio St.3d 65, 2010-Ohio-2453, 930 N.E.2d 770, ¶ 18, and Am. Assn. of Univ. Professors, Cent. State Univ. Chapter v. Cent. State Univ., 87 Ohio St.3d 55, 60, 717 N.E.2d 286 (1999). Courts apply varying levels of scrutiny...
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