[Cite as Corr. Corp. of Am. v. Youngstown, 2013-Ohio-2548.]

                           STATE OF OHIO, MAHONING COUNTY

                                 IN THE COURT OF APPEALS

                                       SEVENTH DISTRICT


CORRECTIONS CORPORATION      )
OF AMERICA,                  )                            CASE NO.    12 MA 111
                             )
      PETITIONER-APPELLANT,  )
                             )
VS.                          )                            OPINION
                             )
CITY OF YOUNGSTOWN, et al.,  )
                             )
      RESPONDENTS-APPELLEES. )


CHARACTER OF PROCEEDINGS:                                 Civil Appeal from Common Pleas Court,
                                                          Case No. 10CV224.


JUDGMENT:                                                 Reversed.


APPEARANCES:
For Petitioner-Appellant:                                 Attorney Timothy Bojanowski
                                                          3100 West Ray Road, Suite 300
                                                          Chandler, Arizona 85226


For Respondents-Appellees:                                Attorney Steven Friedman
                                                          Attorney Bruce Khula
                                                          4900 Key Tower
                                                          127 Public Square
                                                          Cleveland, Ohio 44114-1304


JUDGES:
Hon. Joseph J. Vukovich
Hon. Gene Donofrio
Hon. Mary DeGenaro

                                                          Dated: June 17, 2013
[Cite as Corr. Corp. of Am. v. Youngstown, 2013-Ohio-2548.]
VUKOVICH, J.


        {¶1}    Corrections Corporation of America appeals the trial court’s decision
entering summary judgment in favor of the City of Youngstown, et al. on CCA’s
request for declaratory and injunctive relief. Specifically, CCA sought to enjoin the
City from collecting a $1 per day per prisoner tax under a new city ordinance.
        {¶2}    CCA’s threshold argument is that the ordinance was enacted in
violation of the City’s charter, which requires a vote of the electorate before
enactment of an occupational tax. The City claims that the tax is not an occupational
tax. We conclude that the tax at issue here is an occupational tax.
        {¶3}    Accordingly, the trial court’s judgment is reversed, the prison tax
ordinance is nullified, and the City of Youngstown is enjoined from enforcing the
ordinance.
                                  STATEMENT OF THE CASE
        {¶4}    As background, the City was previously involved in a lawsuit as a result
of Mahoning County threatening to charge the city for housing prisoners at the county
jail. At the time, the county housed some prisoners for the United States Marshal’s
Service for a daily rate of $65-$70. (Bozanich Depo. at 49). These prisoners were
thereafter transferred to the Northeast Ohio Correctional Center, a facility which is
owned and operated by CCA and which houses some federal prisoners under a
contract with the Bureau of Prisons and some under a contract with the U.S.
Marshal’s.
        {¶5}    When the prisoners were transferred to CCA, CCA began receiving the
daily rate. However, $3 per day stayed with the county for administrative purposes.
Id. at 51. When the city’s finance director discovered this, he asked CCA why it was
not using the city for the services which resulted in the pass-through fee and voiced
that it was not fair that the county got the entire $3 per day per inmate fee when the
city provided fire, police, water, sewer, etc.                Id. at 56-61.   Sometime after this
sentiment was expressed to the federal government, the $3 fee to the county was
terminated.
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         {¶6}   In June of 2009, the City passed an ordinance imposing a $1 per day
fee for each prisoner housed in a private institution in the City as a result of
convictions of crimes occurring outside of Mahoning County.              The ordinance
containing the Prisoner Accommodation Fee was to take effect on December 1, 2009
and was declared to be an emergency measure necessary for the immediate
preservation of the public peace, welfare, and safety.
         {¶7}   In November of 2009, the City amended the ordinance to delete the
reference to convictions of crimes occurring outside of the county. The amended tax
was thus generally payable based upon every prisoner or inmate serving a jail or
prison sentence at any private institution in the City. Once again, the ordinance was
declared to be an emergency measure necessary for the immediate preservation of
the public peace, safety, and welfare. The City also expressed a desire to maintain
the original effective date of the ordinance.
         {¶8}   In December of 2009, CCA served the City with its objections to the tax
and a notice of intent to file suit under R.C. 2723.01 et seq., which provides that the
common pleas court can entertain a suit to enjoin the illegal levy of taxes and
assessments.      On January 22, 2010, CCA filed a complaint for declaratory and
injunctive relief against the City and its various officials, asking the court to declare
that the tax was not enforceable for multiple reasons. Both sides filed competing
motions for summary judgment.
         {¶9}   CCA relied on the background outlined above in support of its claim that
intentional discrimination and ill-will were the city’s motives behind the tax. The city
responded that it had to have certain fire and police personnel ready and trained due
to the existence of the 2,000-bed prison in an area where they otherwise may have
closed a fire station. The number of visitors to the prison was also noted. With the
annual budget of the fire department at $15 million and the annual budget of the
police department at $20 million and lay-offs looming due to declining tax revenues,
the city decided a prisoner accommodation fee, which could total over half a million
dollars per year from CCA, would bolster the budget for their safety forces. Id. at 74,
83-84.
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      {¶10} On April 13, 2012, a magistrate issued a decision denying CCA’s
motion for summary judgment, denying part of the City’s motion, and sustaining part
of the City’s motion. The magistrate found genuine issues of material fact for trial
regarding CCA’s equal protection, interstate commerce, and due process arguments
and thus denied the City’s motion for summary judgment on these grounds.
      {¶11} Both sides filed timely objections to the magistrate’s decision. On May
24, 2012, the trial court entered summary judgment in favor of the City on all of
CCA’s claims. CCA filed a timely notice of appeal. Their appellate brief sets forth
seven assignments of error. The first four raise constitutional claims against the
ordinance. The fifth assignment complains that the city enacted the ordinance as an
emergency measure without stating the emergency (noting that the city admits it
declares ordinances to be emergencies as matter of custom).              The seventh
assignment of error raises procedural matters which arose while objecting to the
magistrate’s decision.
      {¶12} As we agree with CCA’s threshold argument (contained in assignment
of error number six) that city council was not permitted to enact this occupational tax
without voter approval, we shall not address the other assignments of error. The
procedural argument is irrelevant since our decision is in their favor on the threshold
issue, and the remaining substantive arguments all depend on the ordinance being
permitted in the first instance. For instance, the city contends that it could pass the
ordinance as an emergency because it was not an occupational tax. As we conclude
below that the tax is in fact an occupational tax which could only be passed with voter
approval, the emergency ordinance provision is now irrelevant.
      {¶13} Regarding the four constitutional arguments, appellate courts are to
avoid deciding questions of constitutional law if a case can be decided on non-
constitutional grounds. State v. Talty, 103 Ohio St.3d 177, 2004-Ohio-4888, 814
N.E.2d 1201, ¶ 9; Hall China Co. v. Public Utilities Comm., 50 Ohio St.2d 206, 210,
364 N.E.2d 852 (1997); Norandex, Inc. v. Limbach, 69 Ohio St.3d 26, 28, 630 N.E.2d
329 (1994); In re Boggs, 50 Ohio St.3d 217, 221, 553 N.E.2d 676 (1990); Kinsey v.
Police & Firemen's Disability & Pension Fund Bd. of Trustees, 49 Ohio St.3d 224,
225, 551 N.E.2d 989 (1990). As we are nullifying the ordinance as invalidly enacted,
                                                                                      -4-

its contents and effects do not exist to review under the Constitution.        We thus
proceed to analyze only assignment of error number six.
                            OCCUPATIONAL TAX ISSUE
       {¶14} CCA’s sixth assignment of error urges:
       {¶15} “AS AN OCCUPATIONAL TAX, THE PRISONER TARIFF REQUIRED
VOTER APPROVAL UNDER CHAPTER 12 OF THE YOUNGSTOWN CITY
CHARTER.”
       {¶16} Section 12 of Youngstown’s City Charter provides in pertinent part:
       {¶17} “nor shall any ordinance, resolution or any other measure ever be
passed providing for the levying or assessing of an occupational tax, upon the
various trades, professions, occupations, businesses or employments carried on and
performed in the City of Youngstown, without having first submitted such ordinance,
resolution, or other measure providing therefor, to a vote of the electors of the City of
Youngstown, and having been approved by a majority of the electors voting thereon.
(Amended November 3, 1925).”
       {¶18} CCA argues that the prisoner accommodation fee is such an
occupational tax which cannot be passed without first being submitted to the voters
for approval. In support, CCA initially urges that the ordinance contains a tax rather
than a fee. CCA points out that a fee is charged by the government in return for a
service and must be proportionate to the service or it becomes a tax. See, e.g.,
Drees Cty. v. Hamilton Twp., 132 Ohio St.3d 186, 2012-Ohio-2370, 970 N.E.2d 916,
¶ 15, 40; State ex rel. Petroleum Underground Storage Tank Release Comp. Bd. v.
Withrow, 62 Ohio St.3d 111, 116, 579 N.E.2d 705 (1991), fn. 5 (look to the
substance, not the form, of the enactment on a case-by-case basis to determine if it
is a fee or a tax).   However, the City of Youngstown already admitted that the
ordinance contains a tax and that it is not a fee assessed for the provision of a
specific service to the prison in return for a charged amount. See City’s Opposition to
CCA’s Motion for Summary Judgment at 4-5 (Nov. 25, 2011). And, on appeal, they
proceed under the premise that the ordinance did impose a tax. The threshold issue
remaining here is thus whether the tax constitutes an occupational tax.
                                                                                     -5-

       {¶19} CCA urges that the tax fits the definition of an occupational tax because
it was imposed against the specific occupation or business of a private entity who
houses prisoners. The City responds by urging that when Section 12 of the Charter
was last amended in 1925, there was no ability to levy income taxes and the
occupational tax referred to is the equivalent of the modern commercial activity tax.
The City concludes that the tax is not an occupational tax as it was not assessed for
the privilege of operating a business in the City but in order to preserve the public
peace, welfare, and safety and to raise revenue due to the police and fire burden
caused by the unique environment of a private prison.
       {¶20} The City of Youngstown once passed an ordinance imposing a $10
annual fee on each juke box in the city and requiring a license prior to operation.
Various juke box operators brought suit against the city seeking a permanent
injunction enjoining enforcement of the ordinance.      The trial court found that the
ordinance had no effect because it was passed in violation of Section 12 of the City
Charter, which provides that no ordinance containing an occupational tax shall be
passed without first being submitted to a vote of the city’s electorate and having been
approved by a majority of the voters. Edward v. City of Youngstown, Mah. Cty. C.P.
No. 119318 (copy contained in CCA’s filings). The city appealed this decision and
lost its appeal.
       {¶21} This court first pointed to the distinction between a licensing fee and a
tax, noting that an excise tax is the exercise of taxing power while licensing is the
exercise of police power. Edward v. City of Youngstown, 7th Dist. No. 3036 (copy
contained in CCA’s filings). The court stated that taxing is a revenue producer but
licensing cannot be enacted in order to raise revenue and then concluded that the
fee imposed was out of proportion to the costs to the city associated with licensing a
juke box and that the fee was used to raise revenue. Id. The court proceeded to
declare the ordinance null and void and restrained the city from enforcing it. Id.
       {¶22} Although the appellate court did not expressly adopt the trial court’s
statement that if it was not a valid licensing fee, then it was an occupational tax
enacted in violation of the city charter, there are Supreme Court cases classifying
certain measures as occupational taxes which support CCA’s position here.
                                                                                   -6-

       {¶23} In one case, the City of Cincinnati’s council passed an ordinance
imposing an annual tax on all persons, firms, and corporations pursuing any of the
trades, professions, occupations, vocations, and businesses named therein; the
ordinance then named manufacturers of bottles and glassware articles and
osteopathic physicians. State ex rel. Zielonka v. Carrel, 99 Ohio St. 220, 124 N.E.
134 (1919). A challenge was made as to whether the state could impose such a tax,
and if so, whether a city could impose that tax where the state did not. The Court
answered both questions in the affirmative. Id. at 229. As there was no issue with
that city’s charter requiring such a tax to be submitted to the electorate, the main
holding of that case is not on point here.
       {¶24} Pertinently, the Supreme Court did define the type of tax involved as an
occupational tax. In doing so, the Court stated that a tax on occupations is an excise
tax and defined excise taxes as:        “Taxes laid upon the manufacture, sale, or
consumption of commodities within the country, upon licenses to pursue certain
occupations, and upon corporate privileges.” Id. at 225. The Court equated the
concept with “a special tax on business.” Id. at 226. “An occupational tax is in no
sense a tax upon property, but is well understood to be a tax on the right to carry on
trade or to transact business.” Id.
       {¶25} In another case, the City of Marion enacted an ordinance stating in
pertinent part that each slaughter house, bakery, newspaper publisher, and mill shall
pay $100 per year plus $2 for each person employed.        Marion Foundry v. Landes,
112 Ohio St. 166, 147 N.E.302 (1925). The Supreme Court found that the tax was
imposed on the privilege of engaging in an occupation. Id. at 174. In overruling
various arguments by the foundry, the Supreme Court found no distinction between
that tax and the occupational tax in Zielonka. Id. See also Stredelman v. City of
Cincinnati, 123 Ohio St. 542, 545-546, 176 N.E.2d 215 (1931) (ordinance requiring
every person, firm, agency, corporation engaged in business of selling insurance to
pay a certain tax was described as an occupational tax).
       {¶26} The City’s suggestion that the reference to an occupational tax in
Section 12 of the City Charter is from a bygone era, a time when income tax was not
permissible, does not present a valid reason to ignore a charter provision that still
                                                                                      -7-

exists. The tax at issue here would not appear to be different from the one Cincinnati
enacted on its osteopathic physicians and its glass manufacturers or the one Marion
imposed upon its mills, bakeries, etc.     Although the City of Youngstown tries to
distinguish its tax because they provided reasons in discovery why the prison
increased the City’s costs for running its police and fire departments, they cite no law
that would make these facts dispositive of whether something they admit is a tax is
an occupational tax.
       {¶27} As established above, an occupational tax is broadly defined by the
Supreme Court. The tax at issue herein is “a special tax on [the] business” of running
a private prison or jail and “a tax on the right to carry on” the occupation or corporate
privilege of running a private prison or jail. See Zielonka, 99 Ohio St. at 225-226.
Merely because the amount of the tax here is based upon the amount of prisoners
does not cause the tax to lose its character as a tax on the privilege of operating a
particular business in the City.   Notably, the tax in Marion Foundry was partially
based upon the number of employees.
       {¶28} We conclude that the City of Youngstown’s prison tax ordinance is not
valid because it contains an occupational tax passed without a public vote in violation
of Section 12 of the City’s charter.     CCA’s sixth assignment of error is hereby
sustained.   Accordingly, the trial court’s judgment is reversed, the prison tax
ordinance is nullified, and the City of Youngstown is enjoined from enforcing this
ordinance.

Donofrio, J., concurs.
DeGenaro, P.J., concurs.
