"Never watch how sausages or laws are made," goes a well-known adage. From time to time we hear of meat products recalled for contamination by a foreign ingredient, and that confirms our nagging suspicion that food manufacture is not as clean and safe as we believe it is and should be. It is less often that we hear about laws being recalled for impurities. However, under Illinois law there is a mechanism to recall, so to speak, contaminated legislation. This mechanism is called the "single-subject rule" and it was invoked by an Illinois appellate court in its recently issued decision in Wirtz, et al. v. Quinn.1 The Wirtz decision invalidated a number of tax and fee increases enacted by the Illinois Legislature in 2009 as part of the funding for a $31 billion capital improvement program, and it may prompt consumers and vendors to seek refunds of the now invalid taxes and fees they paid and remitted. At the same time, the Wirtz decision blows a gaping hole in the state's budget, just weeks after the legislature enacted massive income tax rate increases.

On January 26, 2011, an Illinois appellate court ruled that Public Act 96-34, signed into law July 13, 2009, violated Illinois' single-subject rule, and was void in its entirety. The single-subject rule requires that "Bills, except for bills for appropriations and for the codification, revision, or rearrangement of laws, shall be confined to one subject."2 Although this would seem like a fairly simple rule to follow, enacting legislation was rarely simple in Illinois during the Rod Blagojevich years and their immediate aftermath, when Public Act 96-34 was enacted.

Public Act 96-34 began its life as a five-page bill to amend the Illinois estate and generation-skipping transfer tax. Typical of the way Illinois legislation has become law in the past decade, the bill was gutted by a flurry of last-minute floor amendments that replaced the original content with 280 pages of new material. This new material included: the Video Gaming Act and the Capital Spending Accountability Law, as well as amendments to the Illinois Lottery Law, the State Finance Act, the Use Tax Act, the Service Use Tax Act, the Retailers' Occupation Tax Act, the Motor Fuel Tax Law, the University of Illinois Act, the Riverboat Gambling Act, the Liquor Control Act, the Environmental Protection Act, the Vehicle Code, and the Criminal Code. Public Act 96-34 was signed into law July 13, 2009 by Gov. Quinn (who had by that date replaced Rod Blagojevich as governor). However, because of the mistrust that had built up over several sessions between the administration and legislative leaders, the enactment of the bill that became Public Act 96-34 was part of a complicated deal that also required the enactment of three other bills (Public Acts 96-35, 96-37 and 96-38). These other bills were enacted, but they were made contingent upon the enactment of Public Act 96-34. As a consequence, when the appellate court recently invalidated Public Act 96-34, it also, and at the same time, effectively invalidated Public Acts 96-35, 96-37, and 96-38.

What revenue measures did the appellate court invalidate through its decision? For one thing, the court invalidated the increased taxes on wine, beer, alcohol and spirits that were imposed as a result of Public Act 96-34. In addition, the court invalidated the higher tax rates imposed on certain candy. The court also invalidated the legislation that provided the Illinois Department of Revenue with the authority to conduct the Lottery through a management agreement with a private manager, and to run a pilot program of Lottery ticket sales over the Internet. Certain fees and fines imposed under the Vehicle Code were also invalidated, as was the grant of jurisdiction to the Illinois Gaming Board to administer and enforce video gaming laws.

The state had argued that these disparate measures were bound together by a single subject, "revenue." However, the court determined that treating such a wide range of measures as a single subject simply because all of the measures involved "revenue" would eviscerate the single-subject rule. With respect to these combined amendments, the court found "no natural and logical connection to the single subject of revenue."

The Wirtz case was an appeal of the denial of permission to maintain a suit to enjoin the disbursement of public funds, so it is likely the state thought it could litigate with all "deliberate" speed, and if it lost the matter would be remanded for several more years of litigation. However, during arguments, the state conceded that a single-subject violation is a question of law, so the court, having found such a violation, concluded a remand was unnecessary. So, unexpectedly, the administration and the Legislature find themselves in a difficult position at the beginning of what was already shaping up to be a difficult legislative session.

Gov. Quinn promptly announced that the state will appeal Wirtz to the Illinois Supreme Court. This appeal will also likely include a request for a stay of the decision so the state can continue to collect the invalidated fees and taxes pending a final decision. However, the Illinois Supreme Court is currently occupied with the emergency expedited review of this week's appellate court ruling that Rahm Emanuel was ineligible to be listed on the Chicago mayoral ballot, so a prompt decision appears unlikely.

The revenues from the invalidated laws were intended, in part, to repay bond debt for capital projects. The bonds are backed by the full faith and credit of the State of Illinois, so the Wirtz decision will not trigger a default on the bonds. However, the Legislature must now find a way to replace these now invalid revenue sources during the current budget cycle, assuming the Illinois Supreme Court does not quickly reverse the appellate court decision in Wirtz. The Legislature could vote to reenact the various components of the invalidated laws as separate single-subject bills, but, having recently raised the personal income tax rate from 3 percent to 5 percent and the corporate income tax rate from 7.3 percent to 9.5 percent, it is not clear whether enough legislators will have the stomach to vote for another set of sales and liquor tax and vehicle fee increases. The current General Assembly roster includes many newcomers who did not cast a vote on the recent income tax increases and who, if asked to vote to reenact the invalidated provisions, would not be reaffirming a prior vote on the liquor, candy, video gaming and licensing fees, but would, instead, be casting for the first time a vote for a tax increase. Moreover, the support for video gaming is now believed to be weak or unsteady at best, so other sources of revenue may have to be located.

Vendors who remitted the increased liquor taxes and the increased sales taxes on candy may file refund claims based on Wirtz. However, vendors should also be prepared for claims for refunds from the consumers who paid the higher taxes that were invalidated by the court in Wirtz, since a refund to a vendor is not authorized if it will unjustly enrich the vendor. Whether and how to seek a refund, as a vendor or a consumer, is not a simple decision in this instance.

The Wirtz decision demonstrates that an Illinois law can be recalled, so to speak, when contaminated by impurities. However, it appears that Illinois will be dealing with the ill-effects of the "impurities" included in Public Act 96-34 for some time to come.