THE VILLAGE OF PUT-IN-BAY, APPELLEE, v. MATHYS ET AL., APPELLANTS.
No. 2019-0324
Supreme Court of Ohio
September 16, 2020
2020-Ohio-4421
Submitted March 10, 2020
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Put-in-Bay v. Mathys, Slip Opinion No. 2020-Ohio-4421.]
NOTICE
This slip opinion is subject to formal revision before it is published in an advance sheet of the Ohio Official Reports. Readers are requested to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 South Front Street, Columbus, Ohio 43215, of any typographical or other formal errors in the opinion, in order that corrections may be made before the opinion is published.
SLIP OPINION NO. 2020-OHIO-4421
THE VILLAGE OF PUT-IN-BAY, APPELLEE, v. MATHYS ET AL., APPELLANTS.
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as Put-in-Bay v. Mathys, Slip Opinion No. 2020-Ohio-4421.]
Village ordinance imposing tax on vehicles for hire does not violate
(No. 2019-0324—Submitted March 10, 2020—Decided September 16, 2020)
APPEAL from the Court of Appeals for Ottawa County, Nos. OT-18-006 and OT-18-007, 2019-Ohio-162.
{¶ 1} In this appeal we are asked to decide whether Section 858.01 of the Codified Ordinances of the Village of Put-In-Bay imposes an unconstitutional tax on motor vehicles. We hold that the ordinance does not impose an unconstitutional tax, and thus, we affirm the judgment of the Sixth District Court of Appeals that reversed the trial court‘s dismissal of criminal charges against defendants-appellants, Mark Mathys and Islander Inn, L.L.P.,1 alleging failure to pay the tax.
Facts and Procedural History
{¶ 2} The village of Put-in-Bay is a small municipality and vacation destination located on South Bass Island in Lake Erie. Section 858.01 of the Codified Ordinances of the Village of Put-In-Bay requires that owners of vehicles that are made available for hire and use within the municipality pay a “license fee” on those vehicles. Section 858.01 states:
(a) Owners of vehicles used for the transportation of persons or property, for hire and for use within the Village, shall pay by June 15 of each year, an annual, nontransferable vehicle license fee for each vehicle as follows:
(1) Buses and/or trolleys and/or self-powered trams $300.00 (2) Tour train cars and/or towed tram car/unit $225.00 (3) Taxicabs: A. Motor-driven $225.00 B. Horse-driven $225.00 C. Pedicab bicycles $50.00
(4) Bicycles $15.00 (5) Motorized bicycle/mopeds $37.50 (6) Golf carts/under-speed vehicles/low-speed vehicles $50.00 (7) Rental motor vehicles/vehicles $50.00 (b) All moneys and receipts which are derived from the enforcement of this section shall be credited and paid into a separate fund, which fund shall be known as the Public Service Street Repair Fund. All moneys and receipts credited to such Fund shall be used for the sole purpose of repairing streets, avenues, alleys and lanes within the Village of Put-in-Bay.
{¶ 3} Subsection (c) of the ordinance requires that a “vehicle-fee paid” document be exhibited on every vehicle that is made available for hire. A violation of Section 858.01 is a fourth-degree misdemeanor, and “[a] separate offense shall be deemed committed for each rental vehicle for which the vehicle license fee provided for in Section 858.01 remains unpaid.” Put-in-Bay Codified Ordinances 858.99.
{¶ 4} Matthys and Islander Inn operate businesses that make motorized golf carts available for rent within the village. In early 2015, the village filed separate criminal complaints against Mathys and Islander Inn for failing to pay the annual license fee2 on their golf carts by June 15 of the preceding year.
{¶ 6} In its opposition to the motions to dismiss, the village argued that the doctrine of implied preemption, which we applied in Firestone, is no longer applicable in this area of law in light of this court‘s later decision in Cincinnati Bell Tel. Co. v. Cincinnati, 81 Ohio St.3d 599, 693 N.E.2d 212 (1998). In Cincinnati Bell, we made clear that the “taxing authority of a municipality may be preempted or otherwise prohibited only by an express act of the General Assembly.” Id. at syllabus. The village argued that because nothing in
{¶ 7} Following a hearing on the motions, the trial court entered an order dismissing the criminal complaints on the basis that Section 858.01 is for a similar purpose as the annual state license tax
{¶ 8} On appeal, the Sixth District Court of Appeals reversed. In reaching its decision that Section 858.01 was not preempted by state law and therefore did not violate
R.C. 4504.06 seems similar [to Section 858.01], at first blush, by permitting a municipal corporation to “levy an annual license tax * * * upon the operation of motor vehicles on the public roads or highways” at the rate of $5 per motor vehicle, this statute makes no mention of a tax imposed on a business operating a vehicle-for-hire company. By the plain language of Section 858.01, it applies to businesses based on the size of their vehicle-for-hire fleets, and it is not an annual license tax of the type contemplated inR.C. 4504.06 .
(Ellipsis and emphasis sic.) Id. at ¶ 15.
{¶ 9} Having determined that Section 858.01 is not preempted by state law, the Sixth District turned to whether the tax violates
{¶ 10} Mathys and Islander Inn appealed, and we accepted the following propositions of law:
First Proposition of Law: Because Ohio licenses vehicles for use on all public roadways in exchange for payment of an annual statutory tax on vehicles, no municipality in this state may levy an additional local tax for similar purposes—otherwise, localities could negate or attach additional strings to statewide licenses.
Second Proposition of Law: Under
Ohio Constitution Art. XII, Section 5a , any moneys collected from taxes levied on motor vehicles must be expended solely for a statutory purpose, therefore, a statute—not an ordinance—must enable the expenditure, and hence the exaction, of a vehicle tax.
(Emphasis sic.) See 155 Ohio St.3d 1455, 2019-Ohio-1759, 122 N.E.3d 216.
Analysis
{¶ 11} The two propositions of law before us assert that Section 858.01 violates the
Preemption
{¶ 12}
{¶ 13} Multiple times over the past century, we have been asked to determine whether various municipal taxes conflict with laws passed by the General Assembly and are therefore invalid. In one of our earlier cases, Firestone, 113 Ohio St. 57, 148 N.E. 470, which Mathys and Islander Inn urge us to apply here, we stated that the General Assembly may either expressly or implicitly limit the power of municipalities to levy taxes. Id. at 67.
{¶ 14} In Firestone, we addressed whether a municipality could, through the enactment of a local ordinance, require automobile owners to pay a tax for the right to use their motor vehicles on the streets of the municipality. Finding that the General Assembly had already acted to levy an excise tax on the owners of motor vehicles operating on public highways for the purpose of maintaining and repairing those roads, we held that the municipality could not levy its own tax. Id. at 66-67. In reaching this decision, we followed the syllabus in Cincinnati v. Am. Tel. & Tel. Co., 112 Ohio St. 493, 147 N.E. 806 (1925), which states that the power to levy a municipal tax does not extend to fields that have already been occupied by the state. Firestone at 66. Our syllabus in Firestone states:
The assessment of an annual fee by a municipal ordinance, upon owners of motor vehicles residing in the municipality, for the privilege of operating such motor vehicles upon the streets thereof, for the declared purpose of producing a fund to be used for the cleaning, maintenance, and repair of the streets of the municipality, to which use it is thereby appropriated, though denominated a license fee, is an “excise tax.”
No municipality in this state has power to levy such excise tax in addition to that levied by the state for similar purposes.
{¶ 15} In the decades that followed our decision in Firestone, we cited the case as an example of this court‘s application of the implied-preemption doctrine. See, e.g., E. Ohio Gas Co. v. Akron, 7 Ohio St.2d 73, 77, 218 N.E.2d 608 (1966). But as the years passed, we also came to question the doctrine‘s practicality. See id. (observing that when applying the doctrine, the court‘s language had sometimes been “obscure, ambiguous, inconsistent and, on occasion, almost contradictory to previous cases in stating the grounds upon which the court‘s judgment was based“). Ultimately, in Cincinnati Bell, 81 Ohio St.3d 599, 693 N.E.2d 212, we abandoned use of the doctrine after reexamining the constitutional provisions at issue and determining that municipal taxing authority under
{¶ 16} With this background in mind, we now turn to the first proposition of law. Mathys and Islander Inn contend that the General Assembly has acted to limit municipal authority to tax motor vehicles by enacting its own statutory scheme that taxes vehicle licensure and allows counties and municipalities to impose only what Mathys and Islander Inn refer to as “piggyback” license taxes. See
{¶ 17} At bottom, Mathys and Islander Inn contend that the General Assembly has implicitly preempted the tax imposed by Section 858.01 by imposing a state license tax on motor vehicles. Aware that their argument is at odds with our holding in Cincinnati Bell, Mathys and Islander Inn argue that Cincinnati Bell is not applicable “to the situation of the licensing of motor-vehicles,” which, according to them, “traditionally occup[ies] a special place in the law.” Mathys and Islander Inn urge us to apply our holding in Firestone, 113 Ohio St. 57, 148 N.E. 470, instead. They assert that if we hold that Firestone was overruled by Cincinnati Bell, then municipalities could “unilaterally create their own diverse array of motor-vehicle licensing programs by levying local taxes,” to the effect of requiring separate taxes to be paid and licenses to be displayed in every municipality in Ohio simply to operate one‘s vehicle on public roads. What Mathys and Islander Inn fail to realize is that our holding in Firestone became obsolete long before we decided Cincinnati Bell.
{¶ 18} When this court decided Firestone in 1925, the General Assembly had yet to enact legislation permitting the additional local-government vehicle-license taxes found in
{¶ 19} In light of these statutes, which remain in effect to this day, we find that there is nothing left of our holding in Firestone that applies to the present case, not even as dicta. Indeed, what remains of Firestone is nothing more than an example of this court‘s having at one time applied the doctrine of implied preemption to determine the validity of local tax laws. As we have already explained, this court did away with that approach when, in the syllabus of Cincinnati Bell, 81 Ohio St.3d 599, 693 N.E.2d 212, we unequivocally stated that “[t]he taxing authority of a municipality may be preempted or otherwise prohibited only by an express act of the General Assembly.” (Emphasis added.)
{¶ 20} As an alternative argument, Mathys and Islander Inn assert that the state vehicle-licensing tax scheme is itself “an express restriction on municipalities,” since it specifies the amount municipalities may tax. On this point, we largely agree. But as the discussion that follows demonstrates, this fact does not affect the outcome of this case.
{¶ 21}
{¶ 22} By restricting how local governments may go about imposing a license tax on the operation of motor vehicles on public roads and by imposing a cap on how much they may tax, the General Assembly has expressly limited a municipality‘s authority to tax the operation of motor vehicles. See Ohio Fin. Co. v. Toledo, 163 Ohio St. 81, 86, 125 N.E.2d 731 (1955) (municipal taxing authority is expressly preempted when statute expresses a clear intent to limit the municipality‘s authority to tax); Panther II Transp., Inc. v. Seville Bd. of Income Tax Rev., 138 Ohio St.3d 495, 2014-Ohio-1011, 8 N.E.3d 904, ¶ 20 (“in the context of Cincinnati Bell‘s reasoning, the requirement of ‘an express act of restriction’ means only that the state does not preempt local taxes merely by enacting a
{¶ 23} In contrast to the state vehicle-license tax imposed under
{¶ 24} Because this is a business tax, we are not persuaded by Mathys and Islander Inn‘s arguments that upholding Section 858.01 will result in a chaotic state of local vehicle-licensing whereby every vehicle owner in Ohio will have to procure a special license just to drive from one municipality to the next. Section 858.01‘s tax on rental vehicles does not interfere with the operation of vehicles in the village. The “license fee” referred to in Section 858.01 does nothing to authorize or prohibit a motor vehicle, including the rental vehicles at issue here, from being operated on a public roadway within the village. And nothing in the ordinance requires that the license fee be paid for vehicles that are not rented out by the owner. Put another way, Matthys and Islander Inn may drive their golf carts in the village and may even let others use the carts without charging for their use. But if Mathys and Islander Inn want the privilege of renting those vehicles to others for use within the village, they are required to pay the tax imposed by the ordinance on their rental vehicles.
{¶ 25} Because the tax imposed by Section 858.01 is different from the state license tax and because Mathys and Islander Inn have not pointed to any provision of the Revised Code that expressly preempts the type of tax imposed by the ordinance, we hold that the tax is a constitutional exercise of the municipality‘s right to tax under
Constitutionality under Article XII, Section 5a
{¶ 26} In their second proposition of law, Mathys and Islander Inn assert that Section 858.01 is unconstitutional under
No moneys derived from fees, excises, or license taxes relating to registration, operation, or use of vehicles on public highways, or to fuels used for propelling such vehicles, shall be expended for other than costs of administering such laws, statutory refunds and adjustments provided therein, payment of highway obligations, costs for construction, reconstruction, maintenance and repair of public highways and bridges and other statutory highway purposes, expense of state enforcement of traffic laws, and expenditures authorized for hospitalization of indigent persons injured in motor vehicle accidents on the public highways.
{¶ 28} Again, this argument is based on a faulty assumption that the tax imposed by Section 858.01 is for the operation or use of vehicles on public highways. But as explained above in our preemption discussion, Section 858.01 operates as a business tax on the privilege of renting one‘s vehicle as a business venture. Because the ordinance does not concern or otherwise place any limitations on the operation or use of vehicles on public highways, we hold that Section 5a does not prohibit the village tax.
Conclusion
{¶ 29} For the foregoing reasons, we find Mathys and Islander Inn‘s constitutional arguments against Section 858.01 unpersuasive. We affirm the judgment of the Sixth District Court of Appeals and remand the matter to the Ottawa County Court of Common Pleas for further proceedings consistent with this decision.
Judgment affirmed
and cause remanded to trial court.
O‘CONNOR, C.J., and PIPER and DONNELLY, JJ., concur.
FISCHER, J., concurs, with an opinion joined by KENNEDY and DEWINE, JJ.
ROBIN N. PIPER III, J., of the Twelfth District Court of Appeals, sitting for FRENCH, J.
FISCHER, J., concurring.
{¶ 30} I agree with the majority opinion that Section 858.01 of the Codified Ordinances of the Village of Put-In-Bay does not impose an unconstitutional tax and that the judgment of the Sixth District Court of Appeals that reversed the trial court‘s dismissal of criminal charges against defendants-appellants, Mark Mathys and Islander Inn, L.L.P., alleging failure to pay the tax should be affirmed. I write separately because I believe that additional analysis relating to Mathys and Islander Inn‘s argument as to the application of
Application of Article XII, Section 5a of the Ohio Constitution
{¶ 31} The majority opinion concludes that the “license fee” created by Section 858.01 is a business tax, because it operates as a tax on the privilege of renting one‘s vehicle as a business venture, and thus,
{¶ 32} Ohioans voted to add
{¶ 33}
No moneys derived from fees, excises, or license taxes relating to registration, operation, or use of vehicles on public highways * * * shall be expended for other than costs of administering such laws, statutory refunds and adjustments provided therein, payment of highway obligations, costs for construction, reconstruction, maintenance and repair of public highways and bridges and other statutory highway purposes, expense of state enforcement of traffic laws, and expenditures authorized for hospitalization of indigent persons injured in motor vehicle accidents on the public highways.
Municipalities and Article XII, Section 5a
{¶ 34} In Garrett v. Cincinnati, this court noted that
{¶ 35} While Garrett addressed a municipal fee, not a municipal tax, the same logic applies in this case—
Even if Article XII, Section 5a applied to municipalities, the “license fee” imposed by Section 858.01 would not be unconstitutional
{¶ 36} Mathys and Islander Inn argue that because
{¶ 37} The “license fee” in Section 858.01 is an excise tax, because it is a tax on the privilege of renting one‘s vehicle as a business venture. See Saviers v. Smith, 101 Ohio St. 132, 128 N.E. 269 (1920), syllabus. Therefore, the “license fee” meets the first requirement in
{¶ 39} We then must determine whether the “license fee” created by Section 858.01 is an excise tax that the revenue from which is expended for costs other than those permitted by
costs of administering [the law], statutory refunds and adjustments provided therein, payment of highway obligations, costs for construction, reconstruction, maintenance and repair of public highways and bridges and other statutory highway purposes, expense of state enforcement of traffic laws, and expenditures authorized for hospitalization of indigent persons injured in motor vehicle accidents on the public highways.
Section 858.01 specifically provides that “[a]ll moneys and receipts which are derived from the enforcement of this section shall be credited and paid into a separate fund” and “[a]ll moneys and receipts credited to such [f]und shall be used for the sole purpose of repairing streets, avenues, alleys and lanes within the Village of Put-in-Bay.” This purpose appears to be in line with the purpose indicated in
{¶ 40} Therefore, even assuming arguendo that Garrett was wrongly decided and that
Conclusion
{¶ 41} Because I agree, albeit for slightly different reasons, with the majority opinion that Section 858.01 of the Codified Ordinances of the Village of Put-In-Bay does not impose an unconstitutional tax and that the judgment of the Sixth District Court of Appeals that reversed the trial court‘s dismissal of criminal charges against Mathys and Islander Inn should be affirmed, I respectfully concur.
KENNEDY and DEWINE, JJ., concur in the foregoing opinion.
Walter Haverfield, L.L.P., Susan Keating Anderson, Village of Put-in-Bay Solicitor, and Benjamin Grant Chojnacki, for appellee.
Mayle, L.L.C., Andrew R. Mayle, and Ronald J. Mayle, for appellants.