The Illinois Supreme Court recently issued a unanimous decision upholding two lower court decisions denying a tax rate objection to a forest preserve district’s Illinois Municipal Retirement Fund (IMRF) levy. The taxpayers’ objection was based on a reading of the IMRF statute that would have required any taxing agency other than a school district to adopt its appropriation ordinance before adopting its IMRF levy. But as the Court stated, objectors’ interpretation would actually require a forest preserve district to do something the applicable statutes did not allow. Though the objection was filed against the Forest Preserve District of DuPage County, the decision has implications beyond the IMRF levy of that district.
The statutory phrase at issue in First American Bank Corp. v. Henry was the section of the Pension Code that states: “A municipality other than a school district may levy a tax which shall not exceed the amount appropriated for municipal contributions.” Plaintiffs’ interpretation was that the term “appropriated” was past tense, and therefore a levy was only valid if there was a previously enacted appropriation ordinance. But as the Appellate Court said, it is equally possible to read the statute as meaning “subsequently appropriated” or “eventually appropriated.” While the Supreme Court agreed with the taxpayers that, when read in isolation, the statute seemed to require that the levy follow the appropriation, it rejected the taxpayers’ interpretation because the statute had to be read in its entirety and within the context of related statutes.
The Court’s rejection of the taxpayers’ interpretation is based on a nearby provision of the Pension Code that states that IMRF taxes are to be “levied and collected in like manner, with the general taxes of the municipality.” And, the Downstate Forest Preserve Act requires forest preserve districts to adopt their levies between October and November each year and to adopt their appropriations during the first quarter of the fiscal year. Thus, in the case before the Court, the DuPage County Forest Preserve District had to adopt its levy between October and December 1999 and adopt its appropriation between July and September 2000. And according to the Court, “What the plaintiffs fail to grasp is that there is no exception.” Thus the Forest Preserve District was actually required by statute to do what the taxpayers claimed was illegal. Further, the Downstate Forest Preserve Act explicitly states that the failure to adopt an annual appropriation does not affect the validity of any tax levy of a forest preserve district. Thus, the taxpayers’ interpretation ran counter to the proper reading of the statutory scheme as a whole.
The Court also observed that plaintiffs’ argument “distills down to a policy argument that municipalities should appropriate first and levy second.” The Court noted the merits of such a procedure, but also observed the “difficulties inherent in the long-range financial forecasting that would be necessary if the District were forced to appropriate well before its fiscal year began.” In support of this observation the Court cited to In re Application of the County Collector of DuPage County for Judgment for Taxes for the Year 1993, which details the problems school districts would face under such a requirement.
The Court’s opinion has implications beyond the IMRF levies of forest preserve districts. The Court took a practical, common sense approach to interpreting the relevant statutes. The Court’s opinion also recognized the public policy and public finance implications of the competing statutory interpretations. Both of these themes are positive signs for all taxing agencies facing rate objections.