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Court News Ohio

County May Use Motor Vehicle/Gas Tax Funds to Pay Portion of Self-Insurance Pool Premium That Covers Operations of County Engineer’s Highway Department

In a decision announced today, the court held that a county may expend motor vehicle and gas tax revenues to cover the cost of self-insuring the operations of the county engineer's highway department.

In a decision announced today, the court held that a county may expend motor vehicle and gas tax revenues to cover the cost of self-insuring the operations of the county engineer's highway department.

In a decision announced today, the court held that a county may expend motor vehicle and gas tax revenues to cover the cost of self-insuring the operations of the county engineer's highway department.

In a decision announced today, the court held that a county may expend motor vehicle and gas tax revenues to cover the cost of self-insuring the operations of the county engineer's highway department.

The Supreme Court of Ohio ruled today that a county may use motor vehicle and gas tax (MVGT) revenues it receives from the state to pay the portion of the county’s self-insurance premium that covers the risk of liability and loss resulting from the operations of the county engineer’s highway department.

The court’s 7-0 decision, authored  by Justice Robert R. Cupp, reversed a ruling by the Fifth District Court of Appeals.

The case involved the proper application of Section 5(a), Article XII of the Ohio Constitution, which restricts the use of revenues generated by the state’s motor vehicle licensing and gasoline taxes (referred to jointly as MVGT) to cover the costs of “construction, reconstruction, maintenance and repair of public highways and bridges,” or to pay for traffic law enforcement and certain other “statutory highway purposes.” MVGT taxes are collected by the state and distributed to the county engineers in the 88 counties on a pro-rata basis. They serve as the counties’ primary funding source for local road construction, repair and maintenance projects.

Knox County is one of 62 Ohio counties that self-insure through contributions to the County Risk Sharing Authority  (CORSA), a pool that provides coverage to each of its member counties for their potential liability for claims for various types of loss or damage, including loss or damage arising from the operations of the county engineer’s office.

CORSA calculated Knox County’s self-insurance premium for 2007-2008 and sent an invoice for that amount to the county commissioners. The commissioners paid the premium from the county’s general revenue fund. The commissioners, one of whom was Allen Stockberger, subsequently sent an invoice to the office of county engineer James Henry, stating that the commissioners had calculated the engineer’s office “share” of the county’s CORSA premium, and requesting a transfer of that amount from the engineer’s account to the general fund.

Henry refused to authorize a transfer of the requested amount from his office’s account, asserting that the allocated portion of the CORSA premium was not directly related to a highway purpose and therefore MVGT revenues could not be used to pay that charge.

Stockberger filed a declaratory judgment action in the Delaware County Common Pleas Court against Henry seeking a declaration that the invoice sent to the engineer for the engineer’s allocated portion of the county’s 2007-2008 CORSA premiums represented an expenditure for a highway purpose or was directly connected with highway purposes and thus properly payable from MVGT funds. A bench trial was held.  The trial court ruled that the CORSA premium was directly connected to a highway purpose and could constitutionally be paid from MVGT funds. 

On appeal, the Fifth District Court of Appeals reversed, holding that the commissioners had not presented sufficient evidence to establish a direct nexus between the CORSA premiums and a highway purpose. The commissioners sought and were granted Supreme Court review of the Fifth District’s ruling.

In today’s decision reversing the court of appeals, Justice Cupp wrote: “Whether Article XII, Section 5a authorizes the expenditure of MVGT funds for the engineer’s highway department’s allocated portion of the CORSA premium is guided by our analysis in Madden (v. Bower, ... 1969).  In Madden, the issue was whether the cost of health-insurance premiums for the employees of the county engineer’s highway department could properly be paid from MVGT funds.  We determined that the highway-department employees were directly connected to a highway purpose by virtue of the work they performed.  ...  Because the work of the employees was in furtherance of the purposes for which the MVGT funds could be constitutionally expended, the health-insurance premiums could also be properly paid with the MVGT funds.”

“The operations of the engineer’s highway department have an inherent risk.  This risk cannot be separated from the highway department’s operations and is thus directly connected to a highway purpose.   The evidence establishes that the CORSA premiums recognize this risk of loss inherent in the operation, activities, and duties of the engineer that are directly connected with the construction, maintenance, and repair of the highways or the enforcement of traffic laws, in the calculation of the premium.”

“(J)ust as the health-insurance premiums provided coverage to the employees whose jobs were directly connected to a highway purpose, the CORSA premiums similarly provide coverage for the inherent risk directly connected to the construction, maintenance, and repair of the highways or the enforcement of traffic laws. ... Moreover, the manner in which a county decides to ameliorate that risk, whether by being self-insured, purchasing its own insurance policy, or joining the CORSA risk pool, does not alter the directness of the connection.  Rather, it merely represents a level of risk of financial exposure that the commissioners are willing to have their county assume.”

“In Madden, we approved proportionality as an acceptable method to determine how much of the county employees’ group health-insurance premium could be attributed to the highway department’s employees. ... In the case now before us, the evidence demonstrated that the formula developed at the direction of the CORSA actuary used proportionality to calculate the premiums attributable to the engineer’s highway department.  Accordingly, the commissioners used the same mechanism we approved in Madden to calculate the engineer’s allocated portion. ... The engineer’s nonhighway operations, such as the map department and work performed by the engineer related to county sewers, were not included in the calculations.”

“We conclude that Article XII, Section 5a of the Ohio Constitution authorizes the use of MVGT funds to pay a county’s cost of participating in a joint self-insurance pool attributable to covering the risk of liability and loss resulting from the operations of a county engineer’s highway department.”

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

2011-0859. Stockberger v. Henry, Slip Opinion No. 2012-Ohio-5392.
Knox App. No. 10CA000018, 196 Ohio App.3d 153, 2011-Ohio-1710.  Judgment reversed and cause remanded.
O’Connor, C.J., and Pfeifer, Lundberg Stratton, O’Donnell, Lanzinger, Cupp, and McGee Brown, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-Ohio-5392.pdf

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