Appellate court nixes tax on CCA prisoners
Appeals court rules against city
Says prisoner tax really an occupation tax
By Joe Gorman
The Seventh District Court of Appeals has nullified a tax the city has been imposing on prisoners at the private lockup on the far East Side.
In a ruling this week, the court ruled that the tax on inmates at the prison run by the Corrections Corporation of America is an occupation tax and has to be nullified because the tax was enacted by city council and not by voters. This is contrary to the city charter, which states occupation taxes must be enacted at the polls.
That decision came after Judge R. Scott Krichbaum of Mahoning County Common Pleas Court ruled against CCA when it asked for relief from the tax in 2010. The tax is $1 per prisoner per day at the facility.
Judge Krichbaum ruled against claims by CCA in May 2012 that the city was violating terms of the charter and the state and federal constitutions by levying a dollar-a-day tax on inmates at the Northeast Ohio Correctional Center on Hubbard Road, which houses about 1,500 prisoners.
CCA appealed that decision, saying that the tax is an occupation tax and the city charter forbids those taxes from being levied without a vote of the electorate.
Council agreed to impose the tax against the prison in June 2009.
Writing for the appeals court, Judge Joseph Vukovich said that under state law, the tax imposed by council is indeed “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 jail.”
The city said it needed the tax to provide police, fire and other services to the prison in an area of town that probably would have a fire station closed if the prison were not there, according to court documents. The city also admitted that it was levying a tax to be assessed for providing certain services to the prison for a charged amount.
It has the potential to generate $500,000 annually, depending on the number of inmates.
CCA said it is an occupational tax because it targets a specific occupation or business and a specific business, a private institution, and the court agreed.
Also concurring with Judge Vukovich’s opinion were Judges Mary DeGenaro and Gene Donofrio.
Assistant City Law Director Anthony Donofrio said he could not comment on the opinion because he had not yet seen it. He said the city would consult with the outside legal counsel that argued the case for them before deciding their next course of action.
Steve Owen, senior director of public affairs for CCA, said in a statement the company is pleased with the ruling.
“As we’ve stated from the beginning, we believe the $1-per-inmate tax imposed by the city council was not only invalid but unwarranted,” Owen said.
Owen said CCA has been in Youngstown since 1997 and employs 400 people per year and generates about $1.7 million in taxes annually, and studies have shown it generates revenue of about $800,000 while incurring only $125,000 in expenses to the city.
Owen said the company looks forward to working with Youngstown for years to come.