Court Rules Legislation Authorizing Video Lottery Terminals Is Subject to Referendum
2009-1310. State ex rel. LetOhioVote.org v. Brunner, Slip Opinion No. 2009-Ohio-4900.
In Mandamus. Writ granted.
Moyer, C.J., and Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Pfeifer, J., dissents.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-4900.pdf 
View oral argument video of this case.
(Sept. 21, 2009) The Supreme Court of Ohio ruled today that provisions in the state’s 2010-2011 budget bill authorizing installation of up to 17,500 video lottery terminals (VLTs) at Ohio horse racing tracks are subject to a statewide voter referendum because they do not fall within any of the exceptions to the right of referendum set forth in the Ohio Constitution.
The court’s 6-1 majority opinion, authored by Justice Terrence O’Donnell, granted a writ of mandamus ordering Ohio Secretary of State Jennifer Brunner to accept and process summary petitions submitted by a group identified as LetOhioVote.org, which wishes to pursue a statewide referendum on the VLT program.
As a part of Am. Sub. H.B. 1, the bill establishing the state’s current biennial budget, the General Assembly amended R.C. 3770.03 and enacted R.C. 3770.21 to authorize the installation and operation of VLTs at seven horse racing tracks across the state under the control and regulation of the Ohio Lottery Commission. The bill included specific language stating that the provisions authorizing VLTs, which are projected to generate $851.5 million in net state lottery revenues during the current biennium, were exempt from a referendum by voters and therefore would take effect immediately upon being filed with the Secretary of State. The legislative language stated that the portion of the budget bill addressing the VLT program was exempt from referendum under Article II, Section 1d of the Ohio Constitution, because “it is or relates to an appropriation for current expenses of the state government and state institutions.”
Gov. Ted Strickland signed the budget bill, and transmitted a copy to Secretary of State Brunner on July 17. Pursuant to the language enacted by the legislature, Brunner’s office determined that while other provisions of the bill would not take effect for 90 days, the VLT provisions became effective immediately and were not subject to referendum.
On July 23, three private citizens acting under the name LetOhioVote.org. attempted to file with Brunner’s office a summary petition bearing more than 1,000 signatures and stating the sponsors’ intent to initiate a statewide voter referendum to repeal the VLT provisions included in Am. Sub. H.B. 1. Following the legislative language specifying that the VLT provisions were current-year appropriations not subject to referendum, Brunner declined to accept or review the sufficiency of the group’s summary petitions in the absence of a court order to the contrary. Brunner’s action effectively prevented the referendum proponents from moving forward with a statewide drive to collect the signatures of 6 percent of the state’s voters, the number required to place a referendum before voters.
LetOhioVote.org filed an original action in the Supreme Court of Ohio, asking the Court to issue a writ of mandamus that would compel Brunner to: 1) treat the VLT provisions of Am. Sub. H.B. 1 as subject to referendum notwithstanding the legislature’s assertion to the contrary; 2) accept and process their summary petitions and perform other duties of her office necessary for the group to pursue a ballot referendum on the VLT provisions; and 3) delay the effective date of the VLT provisions of Am. Sub. H.B. 1 until 90 days after the Court’s decision in this case, to allow LetOhioVote.org the full period prescribed by law to obtain the signatures required to place its referendum on the ballot.
Writing for the Court in today’s decision, Justice O’Donnell noted that in 1912 the citizens of Ohio adopted amendments to the state constitution granting voters the right to initiate laws outside of the legislative process by means of initiative petitions and the right to repeal all or part of a law enacted by the General Assembly by means of a ballot referendum. The only exceptions to the right of referendum, he noted, are those set forth in Section 1d, Article II of the state constitution, which states that “laws providing for tax levies, appropriations for the current expenses of the state government and state institutions, and emergency laws necessary for the immediate preservation of the public peace, health or safety, shall go into immediate effect ... (and) shall not be subject to referendum.”
In this case, Justice O’Donnell wrote, Secretary of State Brunner declined to accept the summary petitions submitted to her by LetOhioVote.org based on the legislature’s assertion in Am. Sub. H.B. 1 that the bill’s VLT provisions were appropriations for current state expenses, and therefore not subject to referendum.
In analyzing that assertion, Justice O’Donnell noted that R.C. 131.01(F) defines an “appropriation” as “an authorization granted by the general assembly to make expenditures and to incur obligations for specific purposes.” He wrote: “The VLT provisions of H.B. 1 are not themselves appropriations for state expenses because they do not set aside a sum of money for a public purpose; neither R.C. 3770.03 nor 3770.21 as amended by H.B. 1 makes expenditures or incurs obligations. Rather, they authorize the State Lottery Commission to operate VLT games and to promulgate rules relating to the commission’s operation of VLT games, specify that the provisions of R.C. Chapter 2915 criminalizing gambling activities are inapplicable, bar political subdivisions from assessing new license or excise taxes on VLT licensees, and purport to vest this court with exclusive, original jurisdiction over any claim that the provisions are unconstitutional.”
“We reject intervening respondent’s position that because the funds generated by the VLTs must be used for education, the VLT provisions of H.B. 1 constitute an appropriation. Section 6, Article XV mandates that any funds raised by the state lottery be used to support education ‘as determined in appropriations made by the General Assembly.’ The VLT provisions of H.B. 1 do not appropriate anything. A separate provision of H.B. 1 – line-item 200612 – appropriates these funds to education. Thus, notwithstanding the constitutional mandate that all lottery funds be spent on education, the existence of a separate line item for appropriation of the revenues generated by VLTs demonstrates that the VLT provisions themselves are not appropriations.”
Justice O‘Donnell also noted that while the legislature asserts the VLT portion of the budget bill is exempt from referendum because “it is or relates to an appropriation for current expenses,” the actual language of the constitution is less broad, granting an exception only for “appropriations for the current expenses of state government and state institutions.” He wrote: “The constitutional language does not expressly include an exception for laws that relate to appropriations for the current expenses of the state government. ... (N)otwithstanding the General Assembly’s language in Section 812.20 of the act, the VLT sections of H.B. 1 are not excepted from referendum if they merely relate to an appropriation for current state-government expenses; the exception is for appropriations for the current expenses of the state government – not for enactment of laws (other than tax levies) designed to generate revenue that can be appropriated.”
Justice O’Donnell also pointed to Section 22, Article II of the Ohio Constitution, which specifically provides that “no appropriation shall be made for a longer period than two years.” “In contrast to this temporal limitation,” he wrote, “the VLT provisions of H.B. 1 – R.C. 3770.03 and 3770.21 – do not expire in two years and are designed to become a permanent part of state law for purposes of generating state income. As such, these provisions are not appropriations.”
After examining prior court decisions cited by the parties, Justice O’Donnell concluded: “(R)elators LetOhioVote.org, Brinkman, Hansen, and Pierce have established entitlement to the requested extraordinary relief in mandamus, and the secretary of state is directed to accept the submission of relators’ referendum summary petition and to discharge the duties of her office as provided by Article II of the Ohio Constitution and R.C. 3519.01. The video-lottery-terminal provisions of 2009 Am.Sub.H.B. No. 1 do not fall within any of the exceptions to the right of referendum in that they are neither laws providing for tax levies, nor appropriations for the current expenses of the state government, nor emergency laws necessary for the immediate preservation of the public peace, health, or safety. Therefore, they are subject to referendum. In conformity with our decision in Ohio AFL-CIO (v. Voinovich, 1994) and as acknowledged by the respondents at oral argument, relators are entitled to an extension of the 90-day period in which to submit a referendum petition on the VLT provisions to the secretary of state. We therefore stay the amendments to R.C. 3770.03 and the enactment of R.C. 3770.21, which are the VLT provisions of H.B. 1, for 90 days from the date of this decision in order to allow relators a meaningful opportunity to circulate a referendum petition.”
“We are not unmindful of the effect our decision may have on the state budget, nor of the commendable efforts of the members of the executive and legislative branches of state government to fulfill their constitutional duties to balance the budget in Ohio; however, our own constitutional duty is to ensure compliance with the requirements of the Ohio Constitution irrespective of their effect on the state’s current financial conditions.”
The majority opinion was joined by Chief Justice Thomas J. Moyer and Justices Evelyn Lundberg Stratton, Maureen O’Connor, Judith Ann Lanzinger and Robert R. Cupp.
Justice Paul E. Pfeifer dissented, stating that in his view the VLT provisions included in the budget bill are appropriations for current expenses of state government, and therefore not subject to referendum. He wrote: “Appropriations for ‘the current expenses of the state government and state institutions’ are the type of appropriations shielded from referendum. The exceptions in Section 1d, Article II allow the legislature to budget without the uncertainty that referendum brings to the legislative process. Free from the threat of referendum, obligations and the means to fulfill those obligations are preserved with predictability. The exemption from referendum allows the state to make good on its liabilities; without it, the budget could remain in limbo for over a year, leaving the state unable to pay its ‘current expenses.’
“The legislation contained in Am.Sub.H.B. No. 1 ... related to video lottery terminals (“VLTs”) is no mere legislative add-on, snuck into a mammoth bill. Instead, the VLT legislation is at the very heart of the budget bill, at the very heart of how Ohio is going to pay for its spending over the next two years. Without VLT-enabling legislation, the budget crumbles. Pursuant to H.B. 1, a $2.267 billion appropriation for schools is dependent upon the implementation of VLTs in Ohio. Without the income expected from VLTs, a large part of the funding for that appropriation vanishes, leaving an $851.5 million hole in the budget. ...”
“The money to be raised by VLTs is directly and inextricably linked to a specific appropriation. R.C. 3770.06(B) requires net profits from all lottery functions – including proceeds from VLTs – to be deposited into the Lottery Profits Education Fund. ...With VLT-enabling legislation at risk of referendum, the General Assembly cannot make the appropriation from the Lottery Profits Education Fund that it had budgeted. To decimate the fund is to kill the appropriation that comes from that fund. There is no spending without a source of funds.”
Contacts
Michael Carvin: 202.879.3939, for LetOhioVote.com.
Richard N. Coglianese, 614.466.2872, for Secretary of State Jennifer Brunner.
Benjamin C. Mizer, 614.466.8980, for the Ohio Lottery Commission.
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