IN RE COLLECTOR OF COOK COUNTY

• Decision Date: 28 June 2002
• Docket Number: No. 1-00-2499.,1-00-2499.
• Parties: In the Matter of the Application of the COUNTY COLLECTOR OF COOK COUNTY, Illinois, for Judgment and Order of Sale Against Real Estate Returned Delinquent for the Non-Payment of General Taxes for the Year 1989 and for Judgment Fixing the Correct Amount of Any Tax Paid Under Protest (Ken Oak, et al., Objectors).
• Court: United States Appellate Court of Illinois

774 N.E.2d 832

332 Ill. App.3d 277

266 Ill.Dec. 393

In the Matter of the Application of the COUNTY COLLECTOR OF COOK COUNTY, Illinois, for Judgment and Order of Sale Against Real Estate Returned Delinquent for the Non-Payment of General Taxes for the Year 1989 and for Judgment Fixing the Correct Amount of Any Tax Paid Under Protest (Ken Oak, et al., Objectors).

No. 1-00-2499.

Appellate Court of Illinois, First District, Fifth Division.

June 28, 2002.

Mara S. Georges, Corporation Counsel of the City of Chicago, Lawrence Rosenthal, Deputy Corporation Counsel; Benna Ruth Solomon and Weston W. Hanscom, Chief Assistants Corporation Counsel; Julian N. Henriques, Jr., Assistant Corporation Counsel, for Appellant.

Neal Gerber & Eisenberg, Chicago (James A. Rooney, of counsel), for Appellee.

Presiding Justice CAMPBELL delivered the opinion of the court:

Following a bench trial in the circuit court of Cook County, the trial court sustained 5 of 25 objections filed by various property taxpayers (Objectors) challenging the legality of certain 1989 property taxes levied by the City of Chicago (City). The City appeals the final judgment of the trial court as to those five objections. The Objectors cross-appeal the pretrial dismissal of one of their objections. Given the nature of the objections involved in this appeal, this court will set forth the facts disclosed as to each objection while addressing them sequentially.

I. Background

The tax challenges in this case must be viewed in the context of the City's annual budgeting and appropriations process. The record discloses that in early December 1988, the City Council approved an appropriations ordinance for the City totaling approximately $2.9 billion. The 1989 appropriations ordinance describes anticipated revenues and expenditures for 30 separate funds. The Notes to the City's Combined Financial Statements for 1989, which is part of the City's 1989 Comprehensive Annual Financial Report (CAFR), state that the City's accounts are organized on the basis of funds or account groups; each fund is a separate accounting entity.

The funds fall into three categories: Governmental, Proprietary, and Fiduciary. According to the 1989 CAFR, the Governmental funds include the General Fund, also known as the Corporate Fund, which is the City's general operating fund, and accounts for all financial resources except those required to be accounted for in another fund. The Governmental funds also include Special Revenue Funds, which the 1989 CAFR states are "used to account for revenues from specific taxes or other earmarked revenue sources which by law are designated to finance particular functions of government." These funds require "separate accounting because of legal or regulatory provisions or administrative action." The Special Revenue Funds include the Chicago Public Library Funds, the Public Building Commission (PBC) Fund, and the City Relief Fund.

On February 16, 1989, the City Council approved a levy ordinance in the amount of $620,978,709 upon all property subject to taxation in the City. The levy ordinance incorporated the appropriations ordinance by reference. The levy ordinance also provided that "[i]n no event shall the amount levied for any purpose * * *, exceed the amount appropriated for such purpose, as set forth in the annual appropriations ordinance adopted for the City for the year 1989."

That same day, the City Council also passed a note ordinance (Note Ordinance), authorizing and directing the issuance of "City of Chicago General Obligation Tender Notes, Series 1989." Series 1989A was issued to finance the cash flow requirements of the City. Series 1989B was issued to provide $255,750,000 to pay amounts appropriated to specific named funds.

First Deputy Budget Director Carlson identified the 1989 Revenue Estimates Book, as a detailed look at the budget estimates made by the Department of Budget and Management. The 1989 Revenue Estimates Book states in part that, in conformity with generally accepted accounting principles, the tax levy is distributed to some operating funds through the sale of Daily Tender Notes. The Corporate Fund, two Library Funds, the Judgment Fund, and the City Relief Fund receive proceeds from such sales. Daily Tender Notes are sold in anticipation of the collection of taxes in subsequent years, providing the City with operating funds while it awaits the collection of the tax. Between three and five percent of the levy is not collected; that "loss in collection" is budgeted as an expense in a Note Redemption and Interest Fund 512.

II. Public Aid Funds

The City argues that the trial court erred in sustaining Objection 17, which claimed that the City levied a tax for the City Relief Fund (Fund 660) exceeding the appropriation for that purpose. Generally, no tax can be levied for any purpose absent a legal appropriation for such purpose, and the levy cannot exceed the amount of the appropriation. People ex rel. Schlaeger v. Jarmuth, 398 Ill. 66, 71, 75 N.E.2d 367, 369 (1947); see 65 ILCS 5/8-3-1 (West 2000).

The City claims the trial court sustained the objection "on an entirely different basis that the court interjected into the case sua sponte—specifically, that the City's original appropriations ordinance for 1989 described the appropriations and levy for public aid purposes in an inadequate manner." Yet the City also states in its brief that it does "not doubt the circuit court's power to inject this issue into the case * * *." Thus, the City cannot claim reversible error on this point.¹ It is the judgment and not what else may have been said by the lower court that is on appeal to a court of review; this court may affirm the judgment upon any ground appearing of record. Material Service Corp. v. Department of Revenue, 98 Ill.2d 382, 387, 75 Ill.Dec. 219, 457 N.E.2d 9, 12 (1983).

The City Relief Fund is a Special Revenue Fund that provides general assistance to be expended and administered by the Illinois Department of Public Aid as provided by tax levy. The Illinois Public Aid Code provides in relevant part that:

"To qualify for State funds to supplement local funds for public aid purposes, a local governmental unit shall, except as hereinafter provided, levy within the time that such levy is authorized to be made a tax of an amount which, when added to the unobligated balance available for such purposes at the close of the fiscal year preceding the fiscal year for which the tax is levied will equal .10% of the last known total equalized value of all taxable property in the governmental unit." Ill.Rev.Stat.1987, ch. 23, § 12-21.13; see 305 ILCS 5/12-21.13 (West 2000).

The Illinois Municipal Code provides in part that:

"Taxes levied by any municipality having a population of 500,000 or more for general assistance for persons in need thereof as provided in The Illinois Public Aid Code, as now or hereafter amended, for each fiscal year shall not exceed the rate of .10% upon the value of all property therein as that property is equalized or assessed by the Department of Revenue. Nor shall the rate produce in excess of the amount needed in that municipality for general assistance for persons in need thereof.

All money received from these taxes and moneys collected or recovered by or in behalf of the municipality under The Illinois Public Aid Code shall be used exclusively for the furnishing of general assistance within the municipality; for the payment of administrative costs thereof; and for the payment of warrants issued against and in anticipation of the general assistance taxes, and accrued interest thereon." Ill.Rev.Stat. 1987, ch. 24, § 11-43-2; see 65 ILCS 5/11-43-2 (West 2000).

The 1989 appropriations ordinance incorporated these requirements for Fund 660:

"The aggregate amount to be appropriated hereunder shall equal the maximum authorized tax rate required to qualify this fund for additional money available for expenditures from State funds. The maximum authorized tax rate is .10 percent of the last known total equalized value of all taxable property within the City."

The City's levy ordinance also provided that the amount levied for any purpose shall not exceed the amount set forth for that purpose in the appropriations ordinance.

The appropriations ordinance showed that Fund 660 had a total of $17,731,203 appropriable for charges and expenditures, of which $1,691,203 represented interest on the sale of daily tender notes;² the difference is $16,040,000.

The deposition testimony of James Welker, who began working for the City in 1965 and held the position of Assistant Comptroller for the City from 1985 through 1998, was admitted into evidence at trial. Welker testified that a June 19, 1990, letter he sent to the Department of Public Aid gave correct information regarding the 1989 levy. Welker's June 19, 1990, letter to the Chief of the Bureau of Internal Audits for the Illinois Department of Public Aid states that the correct amount of the levy for 1989 was $18,997,720. The City's 1987 CAFR states that the total equalized assessed value of all taxable property in 1987 was $18,997,720,225.

According to Welker, proceeds of debt, interest income and tax collections went into the City Relief Fund. Welker stated that "the levy is in the note fund," and exceeds the principal pertaining to the repayment of the notes issued. The 1989 appropriations ordinance shows that $257,611,973 was appropriated to Fund 512 for payment of term notes, and $14,230,630 was appropriated for loss in collection of taxes, bringing the fund total to $271,842,603.

On November 29, 1989, the City Council approved a supplemental appropriations ordinance, allocating an unanticipated $400,000 surplus in Fund 660 from the prior year to Fund 660, resulting in a total appropriable for charges and expenditures of $18,131,203.

In sum, the record shows that the City Relief Fund was to be funded by the sale of daily tender notes in an amount which...