COLUMBUS, Ohio – Taking money collected on gasoline sales by the states updated business tax and spending it on anything but highway-related programs is unconstitutional, the Ohio Supreme Court ruled Friday.
The ruling came as the justices accepted arguments that the tax is wrongly diverting $140 million annually from fuel sales to non-road work accounts for schools and cities.
Builders, contractors, construction companies and engineers had sued over the tax, claiming that Ohio voters have repeatedly rejected the notion of diverting taxes raised from fuel sales to non-road work.
The court said in a 6-1 decision that the Commercial Activity Tax still be applied to companies that make money selling fuel, but it cant be diverted into the state fund that pays for everything from schools to health care for the poor. They came to a different conclusion three years ago in a similar suit brought by grocers over the taxs application to grocery store food sales.
The Ohio Constitution explicitly prohibits the expenditure of revenue derived from excises on motor-vehicle fuel for any purpose other than highway purposes, Justice Robert Cupp wrote for the majority.
The state can still collect the money but cant spend it until the General Assembly passes a law adjusting what it can be constitutionally used for, Cupp added.
Groups opposed to the tax had argued the Ohio Constitution bars money raised from the sale of fuel from being used on anything but highway upkeep.
The diversion of any of these excise taxes undermines the will of the people to preserve the motor vehicle fuel-related excise tax base for public road repair and construction, Anthony Ehler, an attorney representing both construction companies and county engineers whose budgets rely on fuel taxes, said in a March 20 court filing.
Ehler said Friday the decision wont raise or lower taxes that people pay for fuel but will improve driving in Ohio.
Ultimately, it will mean better funding for roads and bridges and safe driving, Ehler said.
At issue is a 2005 rewrite of Ohios tax code that taxes a variety of business activity.