State, ex rel. Petroleum Underground Storage Tank Release Comp. Bd., v. Withrow

• Decision Date: 13 November 1991
• Docket Number: No. 91-313,91-313
• Citation: 62 Ohio St.3d 111,579 N.E.2d 705
• Parties: , 11 A.L.R.5th 1010 the STATE, ex rel. PETROLEUM UNDERGROUND STORAGE TANK RELEASE COMPENSATION BOARD et al., v. WITHROW, Treasurer.
• Court: Ohio Supreme Court

Page 111

62 Ohio St.3d 111

579 N.E.2d 705, 11 A.L.R.5th 1010

the STATE, ex rel. PETROLEUM UNDERGROUND STORAGE TANK RELEASE COMPENSATION BOARD et al., v. WITHROW, Treasurer.

No. 91-313.

Supreme Court of Ohio.

Submitted Sept. 10, 1991.

Decided Nov. 13, 1991.

Respondent Mary Ellen Withrow, as the Treasurer of the state of Ohio, is named custodian of the Assurance Fund by R.C. 3737.91(A). When the board attempted to exercise its statutory authority and issue the bonds, it requested that the Treasurer open an account for receipt and disbursement of proceeds from the bond sale, and also requested that she disburse moneys from the Assurance Fund to meet debt service on the bonds. The Treasurer refused, effectively blocking the board's attempt to issue the bonds, because in her opinion the storage tank assessments are taxes, and not fees. The Treasurer contends that issuance of the bonds would violate the prohibition contained in Section 13, Article VIII of the Ohio Constitution that " * * * moneys raised by taxation shall not be obligated or pledged for the payment of bonds * * *."

The board now seeks a writ of mandamus to require the Treasurer to perform her statutory ministerial duties.

Vorys, Sater, Seymour & Pease, Suzanne K. Richards, Douglas L. Rogers, James C. Becker and David A. Westrup, Columbus, for relators.

Lee I. Fisher, Atty. Gen., Loren L. Braverman and Cherry Lynne Poteet, Columbus, for respondent.

Porter, Wright, Morris & Arthur, Anthony J. Celebrezze, Jr. and Kathleen McManus Trafford, Columbus, urging granting of the writ for amici curiae, Ohio Petroleum Council and its members and Ohio Petroleum Marketers Ass'n.

ALICE ROBIE RESNICK, Justice.

This action tests the constitutionality of that portion of R.C. Chapter 3737 which grants the board the authority to issue revenue bonds. See R.C. 3737.90(B)(6) and 3737.94. The narrow issue which arises is whether the assessments that make up the Assurance Fund are "moneys raised by taxation." If the moneys are taxes (as opposed to fees), as respondent contends, then they may not be "obligated or pledged for the payment of bonds," and that portion of R.C. Chapter 3737 must be unconstitutional. See Section 13, Article VIII of the Ohio Constitution. ²

A fee is a charge imposed by a government in return for a service it provides; a fee is not a tax. Cincinnati v. Roettinger (1922), 105 Ohio St. 145, 153, 137 N.E. 6, 8. Therefore, if the moneys assessed are fees and not taxes, a writ of mandamus from this court is proper to compel the Treasurer to perform her duty.

Relators must show the existence of three circumstances for a writ of mandamus to issue from this court: (1) relators must have a clear legal right to the relief prayed for; (2) respondent must be under a clear legal duty to perform the acts; and (3) relators must have no plain and adequate remedy in the ordinary course of the law. State, ex rel. Berger, v. McMonagle (1983), 6 Ohio St.3d 28, 29, 6 OBR 50, 50-51, 451 N.E.2d 225, 227, certiorari denied (1983), 464 U.S. 1017, 104 S.Ct. 548, 78 L.Ed.2d 723; State, ex rel. Westchester Estates, Inc., v. Bacon (1980), 61 Ohio St.2d 42, 15 O.O.3d 53, 399 N.E.2d 81, paragraph one of the syllabus; State, ex rel. Harris, v. Rhodes (1978), 54 Ohio St.2d 41, 42, 8 O.O.3d 36, 37, 374 N.E.2d 641, 641.

In order to meet the first prong of the foregoing test, the constitutionality of the bond issuance must be resolved. It must be determined whether the assessments are fees or taxes. Only if the assessments are fees is the Treasurer under a clear legal duty to establish the separate account and to disburse fees from the Assurance Fund. The third prong is clearly satisfied. It is without question that the relators have no other remedy available, because the Treasurer bases her refusal to act on the unconstitutionality of the legislation, and relators have no remedy for that refusal to act other than a mandamus action.

Section 4, Article VIII of the Ohio Constitution, which prohibits the state from giving or loaning its credit to any individual association or corporation in any way, standing alone, would necessitate holding the bond issuance unconstitutional. See State, ex rel. Saxbe, v. Brand (1964), 176 Ohio St. 44, 26 O.O.2d 309, 197 N.E.2d 328. However, in 1965 the voters of Ohio approved Section 13, Article VIII, which allows the state to participate in some project financing in limited circumstances. ³ Although Section 13 was amended in 1974, it retained the requirement that " * * * moneys raised by taxation shall not be obligated or pledged for the payment of bonds or other obligations * * *."

Running throughout Article VIII of the Ohio Constitution is a concern about placing public tax dollars at risk to aid private enterprise. See Walker v. Cincinnati (1871), 21 Ohio St. 14, 53-56. The policy reasons behind Article VIII's limitations on state bond issuance are called most strongly into play when state tax dollars are clearly placed at risk in what may be unwise investments. Of critical importance to the decision in the case at bar is that no moneys other than those in the Assurance Fund are actually at risk. The statutory scheme is narrowly drawn to ensure that the bonds are not supported by the full faith and credit of the state. R.C. 3737.944 explicitly provides that a statement that the bonds are not debts of the state must be placed on the face of the bonds, which are "payable solely from revenues and funds pledged for their payment." Thus, the bondholders bear the risk of the Assurance Fund's inability to meet its obligations. The holders "have no right to have taxes levied by the general assembly or the taxing authority of any political subdivision of the state for the payment of the principal thereof or interest thereon. * * *" Id.

Both relators and respondent have called this court's attention to numerous cases which determined that certain assessments either are or are not taxes. Many of those cases that consider whether a specific charge is a tax have arisen when a government's assessment is challenged by the taxpayer as being an unconstitutional tax. But in the case at bar, relators are arguing that a government-imposed exaction is not a tax. This signals that most of the cited cases are inapposite, and would not be strong precedent in deciding the case at bar. Different values and goals are implicated here.

For example, relators cite Cincinnati v. Roettinger, supra, as establishing a test for what is a tax. Relators suggest that the test should be whether the assessment generates excess funds which are to be placed into the General Fund. While that may be an appropriate test in some cases, it is not well suited for the resolution of this controversy. Determining whether an assessment is a fee or a tax must be done on a case-by-case basis dependent upon the facts and circumstances surrounding each assessment.

Relators liken the Assurance Fund program to insurance, in that it involves the quid pro quo of a service in return for a fee. Respondent argues that the Assurance Fund is not a type of insurance, but more closely resembles enforcement by the state of its taxing power. ⁴ To this end, respondent cites State, ex rel. Youngstown Sheet & Tube Co., v. Leach (1962), 173 Ohio St. 397, 20 O.O.2d 33, 183 N.E.2d 369, which held that employer contributions to the Unemployment Compensation Fund are taxes, and State, ex rel. Shkurti, v. Withrow (1987), 32 Ohio St.3d 424, 428, 513 N.E.2d 1332, 1336, fn. 4, which cited that holding. The Treasurer further contends that because the Assurance Fund program provides a direct benefit to the public, it is necessarily a tax and not a type of insurance program. While it is true that the program does benefit the public by maintaining a clean environment and compensating individuals for damages caused by leaking USTs, a public benefit can be found in any legislation enacted pursuant to Section 13, Article VIII, Ohio Constitution, which by definition must be for a public purpose. Hence this cannot be a valid test in all cases when determining whether an assessment is a tax or a fee. We can see no reason to hold that an exaction is a tax simply because the public is benefited.

Likewise, while it is true that the Assurance Fund resembles an insurance program, that inquiry alone is not dispositive on the issue of whether the assessments are taxes. These assessments are sufficiently different from those involved in any of the cases cited by either party that no precedent is strongly persuasive. For example, the Shkurti court's statement that employer contributions to the Unemployment Compensation Fund are taxes does not require us to hold that the contributions at issue here are also taxes. That case, which declared a proposed bond issuance unconstitutional, did not involve Section 13, Article VIII, but instead concerned a violation of Sections 1 and 3 of Article VIII. The tax issue was not a factor in the court's analysis.

State, ex rel. Gordon, v. Rhodes (1952), 158 Ohio St. 129, 48 O.O. 64, 107 N.E.2d 206, cited by relators, is another example of a case that decided whether a particular exaction is or is not a tax. That case held that revenues derived by a municipality from on-street parking meters are...