On January 26, the First District Appellate Court held in W. Rockwell Wirtz, an Individual and Wirtz Beverage Illinois, LLC, on Behalf of and for the Benefit of the Taxpayers of the State of Illinois v. Patrick Quinn, et.al, commonly known as Wirtz v. Quinn, that Public Act 96-34 and its three ancillary Acts were void in their entirety. P.A. 96-34 and its ancillary acts were expected to generate revenue for the State for its various infrastructure projects, including construction projects for school districts. This decision has the potential to halt or delay school district construction projects. The Appellate Court found that P.A. 96-34 violated Article IV, Section 8(d) of the Illinois Constitution, which mandates that bills be confined to a single subject (“single subject rule”). In summary, the single subject rule prevents “bundling” of less popular bills with well-received bills to inhibit less popular bills from passing with the aid of the well-received bills.

P.A. 96-34 addressed, among other things, increasing taxes under the Use Tax Act, Retailers’ Occupation Tax Act and Liquor Control Act. The additional revenue from these tax increases were to be funneled into the Capital Projects Fund. That fund provides grants through the “School Construction Program” for several school district building construction and renovation projects. There is no answer presently on how this decision will affect school districts that have applied for and are expecting to receive the funds from the grants.

The December 2010 Capital Needs Assessment Survey compiled by the Illinois State Board of Education and the Capital Development Board, both of whom administer the grants for school construction, found that nearly $1.3 billion is needed to build 97 new school buildings, nearly $1 billion is needed for 209 building additions, and more than $7.7 billion is needed for overall general repair and remodeling projects. In addition to general construction and repair, the Boards have found that there is a need for more than 500 additional classrooms for both pre-kindergarten and kindergarten classes. Further, construction of classrooms for all grade levels is needed to ease overcrowding in districts currently using temporary classrooms.

Both the State and the State Attorney General’s Office may seek a stay of the ruling and appeal the decision to the Illinois Supreme Court. We will keep you apprised of any new developments.