Opposition Brief — Harte v. Lehnhausen

INDEX

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I iy cna Gk ene eh asee nein se ne aon es

I eV cele se MEAR MERRION © ENS 8

Reasons for Denying the Writ .....................

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TABLE OF AUTHORITIES

Clarendon Associates v. Korzen, 56 Ill. 2d 101, 106,

108, 306 N.E. 2d 299 (1973) ...........2..eeeeeeee 10

Davis v. Board of Education, 323 Tll. 281, 282, 154 N.E.

Sia ae aE Dest nO ae 9

Eichman v. Anderson, 23 Ill. App. 2d 329, 333, 162

8 ey gs Re rT oer 9

Hammer v. Lehnhausen, 60 Ill. 2d 400, 328 N.E. 2d 11

SES Cd Deu chs chaGd be Wabene sk REA Gah DTN RE <00. 4

People ex rel. Cannella v. City of Chicago, 7 Ill. 2d

416, 419-420, 131 N.E. 2d 98, 100 (1955) .......... 9

People ex rel. City of Highland Park v. McKibbin, 380

Ill. 447, 452, 44 N.E. 2d 449, 451 (1942) ........... 9

People ex rel. Eitel v. Lindhewmer, 371 Ill. 367, 371, 21

Be en RUD sccscs vend aenecntiean can 9

People ex rel. Hammer v. Jones, 39 IL 2d 360, 372,

ee a EE 6s na nb widun ndescesenatades 3

People ex rel. Hillison v. C._B.&Q. R.R .Co., 22 Ill. 2d

88, 102, 103, 174 N.E. 2d 175 (1961) .............. 7, 10

ii.

People ex rel. Kohorst v. G.M.&O. R.R. Co., 22 TLL 2d

104, 112, 114, 174 N.E. 2d 182 (1961) ............ 7, 10

People ex rel. Kutner v. Cullerton, 58 Ill. 2d 266, 319

Rs OE Gb cba ches ob <kae nares s 7

People ex rel. Stettauer v. Olsen, 215 Ill. 620, 624, 74

a cy Fe CRO eiiweniniees HI PO eR 9

People ex rel. Town of Cicero v. Sweitzer, 339 Ill. 28,

Mm Foe Re ETS ap mr emny pepe reer 9

Rodriguez v. San Antonio Independent School District,

337 F. Supp. 280 (W.D. Texas 1971), reversed 411

THe: 5 BS B. Gas Ee Cte od hihi ccinnes 5

S.A.S. v. Kucharski, 53 Til. 2d 139, 142, 290 N.E. 2d

"Ug." aphanedidar eget 5 arts SSN COg Rie a ena 9

Serrano v. Priest, 96 Cal. Reptr. 601, 487 P. 2d 1241

NN ag os San ei yan Cos are r kN casein ox 5

Statutes

1970 Illinois Constitution, Art. VIII § 1(b) ..........

1970 Illinois Constitution, Art. [IX § 4(b) ........... 7

Illinois Revised Statutes 1973:

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AIRSET SRE ar ey RR nance 6, 8

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5 RINNE MRE Rep a eee aia eciiae 5

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WU co tg oe Ns 10

Attorney General’s Opinion, File No. S-404 (February

et oe ee ee ee eae eee eee ee es | oe eee

IN THE

Supreme Court of the United States

Octoser Term, 1975

No. 75-253

CLARE HARTE, on her own behalf and on behalf of all

citizens and taxpayers of Cook County, Illinois,

Plaintiff -Petitioner,

vs.

ROBERT J. LEHNHAUSEN, Former Director of the De-

partment of Local Government Affairs, State of Illinois;

MICHAEL J. BAKALIS, Superintendent of Public In-

struction, State of Illinois; and FRANK A. KIRK,

Director of the Department of Local Government Af-

_ fairs, State of Lllinois,

Defendants-Respondents.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

2

FRANK A. KIRK, Director of the Department of Local

Government Affairs and DR. JOSEPH M. CRONIN,

State Superintendent of Education, by WILLIAM J.

SCOTT, Attorney General of the State of Illinois, file this

brief in opposition to the Petition for Writ of Certiorari

to the Supreme Court of Illinois.

OPINIONS BELOW

The opinion reported at 60 Ill. 2d 542, 328 N.E. 2d 543 is

one of a series of interrelated cases decided by the Su-

preme Court, or now pending before the Llinois courts,

involving the implementation of full value property assess-

ment, classification of real property and intra and inter-

county equalization. Two of these related cases are re-

ported at 58 Ill. 2d 266, 319 N.E. 2d 55 and 60 Ill. 2d 400,

328 N.E. 2d 11.

QUESTION PRESENTED

Whether it is an abuse of judicial discretion to order the

prospective remedy of a long standing problem and to re-

ject non-statutory, burdensome and impractical proposals

for retroactive relief.

STATEMENT OF THE CASE:

The Llinois Supreme Court held:

‘‘In our opinion, however, it would be comp!etely in-

appropriate to direct the Superintendent of Public

Instruction to distribute school aid in a manner con-

trary to law in order to remedy the mistakes of other

governmental departments which have ignored the law.

Furthermore, to utilize one multiplier for purposes of

taxation and a different one for other purposes, such

as computing State school aid as urged by [petitioner]

does nothing to resolve the fundamental problem,

which is the failure of both local and State assessing

authorities to implement the statutory system for

property assessments designed to achieve uniform

equalized assessments among the counties at 50% of

actual value. Nor does [petitioner’s] remedy alleviate

similar problems in other areas, such as public aid,

arising from this nonfeasance. While not of major

significance in the context of this case, adoption of

[petitioner’s] suggested remedy would compel tax-

payers in those few counties with equalized assessed

valuations higher than Cook to contribute portions of

their sales and income tax payments (the sources of

the common school fund) to make up the amount [peti-

tioner] claims due in Cook County school districts.

The problems presented by this case are the direct

result of the failure of governmental officials to per-

form their duties in the manner prescribed by law. As

we indicated in People ex rel. Hamer v. Jones (1968),

39 Ill. 2d 360, 372, these problems ‘‘do not readily lend

themselves to judicial solution,’’ and, as the trial court

here indicated in denying the preliminary injunction,

the remedies sought may cause such additional diff-

culty, delay and expense as to make their use impracti-

4

cal. That, in our judgment, is true here as to past

years.

As to equalized, assessed valuations for 1975 taxes,

payable in 1976, a different situation exists. As to

them our judgment in Hamer v. Lehnhausen (1975),

60 Ill. 2d 400, should prove dispositive and eliminate

inequities in future years.”

—-

5

REASONS FOR DENYING THE WRIT

I

The Illinois public school system (as most other services

provided by local governmental units) ‘is supported by a

tax on the real property located within the loca] taxing

body. (Ill. Rev. Stats. 1973, Chap. 122, § 10-20.3, § 17-2)

Each school district (and all other local governmental units)

adopts an annual budget, and authorizes a tax levy to meet

the district’s needs as provided in the budget. (Ill. Rev.

Stats. 1973, Chap. 122, § 17-1, § 34-43, 34-44, 34-53) The

capacity of the taxing body to raise revenue by a levy is

directly related to the total value of its taxable property

as equalized. [See e.g. Serrano v. Priest, 96 Cal. Reptr. 601,

487 P. 2d 1241 (1971); Rodiguez v. San Antonio Independ-

- ent School District, 337 F. Supp. 280 (W.D. Texas, 1971),

rev. 411 U.S. 1,96 S. Ct. 1278 (1973)]

The taxing capacity of school districts is enlarged by

increases in aggregate assessed valuation, and diminished

by decreases. Indeed, the School Code was amended in

1972 (ill. Rev. Stats., 1973, Chap., 122, §34-44.1) to author-

ize the Chicago school district to adopt a supplementary

budget for the use of added potential revenues when the

value of taxable property in the school district is increased

by the establishment of a new and higher equalization mul-

tiplier. .

However, it is the magnitude of the budget and tax levy

when extended to individual parcels of real estate, not level

of assessment, which determines the actual tax to be col-

lected from each taxpayer.

To encourage a state-wide foundation level of expen-

ditures for public education, when a school district has

levied taxes upon itself at prescribed minimum qualifying

rates, the School Code provides for an ‘‘equalization quo-

ta’’ from the State common school fund to supplement the

6

district levy so as to produce the sum of $520 per pupil

in average daily attendance. (Ill. Rev. Stats. 1973, tig

122, § 18-8)

No school district receives the ‘‘equalization quota’’

except as its local taxing effort at the qualifying rate

fails to produce $520 per pupil. Some districts tax them-

selves at less than the qualifying rate and receive no

‘*equalization quota’’ at all. Most districts tax themselves

in excess of the qualifying rate to enable education expen-

ditures in excess of $520 per pupil. The Chicago school

district taxes itself at the maximum statutory limit.

Since computation of any State supplement is interre-

lated with the value of taxable property as equalized by

the Department of Local Government Affairs, as revenues

produced at the qualifying tax rate decline, the amount

of State supplement necessary to produce $520 per pupil

increases.

For most Cook County school districts, however, assess-

ment at less than full value as authorized by statute

would mean losing approximately $2 in budgeted tax rev-

enue for every $1 gained in State aid.

Consequently, any decrease in the ‘‘multiplier’’ to effect

equalization of Cook County real property at less than the

statutory 50% of actual value, as petitioner argues, would

actually produce unmanageable deficits for the various

county school districts unless compensatory tax increases

could be enacted.

Moreover, the Revenue Act provides that the equaliza-

tion factor or ‘‘multiplier’’ is certified to the County

Clerk for all taxing purposes, and used to establish taxes

to be extended by all the county taxing bodies. (Ill. Rev.

Stats. 1973, Chap. 120, § 632, 643; Tr. 545-547) Any change

in the ‘‘multiplier’’ intended to produce a reduction in

7

assessed valuation for school districts would also simul-

taneously shrink the tax base of al] other major taxing

bodies and plunge them into unexpected deficits and chaos.

The very issue raised by Petitioner came before the IIli-

nois General Assembly when the Department of Local Gov-

ernment Affairs proposed to reduce the Cook County

‘‘multiplier’’ from the existing 1.59 to 1.48. Strenuous ob-

jection was voiced by the school districts and taxing bodies

to be affected, and P.A. 78-1097, (Ill. Rev. Stats. 1973

Chap. 120, § 643), effective July 26, 1974, was hurriedly

enacted to mandate a freeze of the Cook County multiplier

at the higher 1.59 rate certified in 1972.

It should also be noted that, as a consequence of classi-

. fication, Petitioner’s residential property is actually as-

sessed substantially less than the statutory 50% of ac-

tual value, and even after equalization remains at a lower

level of assessment than identical parcels of residential

property in downstate counties.

Non-uniformity is inherent in a classification system,

and is recognized and embodied in the 1970 Illinois Con-

stitution [Art. IX, § 4(b)] and amendments to the Reve-

nue Act of 1939 [inter alia, Il]. Rev. Stats. 1973 Chap.

120, § 482(24), § 501 (1)]. In People ex rel. Kutner v.

Cullerton, 58 Tll. 2d 266, 319 N.E. 2d 55, the court found

that lack of uniformity per se did not constitute a viola-

tion of the due process and equal protection clauses of the

constitutions of the United States and Illinois. Moreover,

Cook County is accorded special classification under the

Revenue Act in many different respects.

Be.

In both People ex rel. Hillison v. C.B. & Q. R.R. Co.,

22 Ill. 2d 88, 102 (1961) and People ex rel. Kohorst v.

G.M. & O. R.R. Co., 22 Til. 2d 104, 112 (1961) the allega-

tion had been made that taxpayer’s property was assessed

8

by the Department of Revenue, predecessor to the Depart-

ment of Local Government Affairs, at 100% of full, fair

cash value while locally assessed property, after equaliza-

tion, was assessed at levels ranging from 38.50% (22 IIl.

2d at 114) to 55% (22 Ill. 2d at 102). '

This Court there stated (p. 102) :-

‘*The theory of defendant’s tax objection is construc-

tive fraud. Logically, therefore, the measure of recov-

ery should be the amount by which it was ‘construc-

tively defrauded’ by the failure of the assessing and

equalizing authorities to comply with the statutory

mandate of assessing and equalizing locally assessed

property at its full cash value. This would be the dif-

ference between defendant’s 1958 taxes and _ the

amount its taxes would have been had locally as-

sessed property been equalized at a level represent-

ing 100% of full cash value. Such a measure of re-

covery is not only more consistent with the theory of

constructive fraud, but also involves a less obvious de-

parture from the statutory requirement of full value

assessment.

. . . the departure from the law on the part of the

Department of Revenue was not in assessing defend-

ant’s property at its full value, but in failing to equal-

ize locally assessed property at its full value.”

Because State school aid is a residual grant program,

contingent upon the magnitude of local tax collections

(Ill. Rev. Stats. 1973 Chap. 122, § 18-8), Petitioner seeks

to reassess and re-extend the taxes in 1969 through 1972

in order to claim an increased ‘‘equalization quota.’’ If

excessive taxes were collected in those years, the taxpayer

must be entitled to a refund from the taxing bodies.

It is undisputed by Petitioner that the tax years in dis-

pute are closed and all taxes expended for their budgeted

9

purposes. In effect, then, Petitioner would have the court

go back and attempt to unscramble an egg.

The possibility of a retroactive reassessment was con-

sidered in an Attorney General’s Opinion, File No. S-404,

issued February 16, 1972 to the Department of Local

Government Affairs. At page 6 of the opinion, it con-

cludes :

‘*’.. you have asked whether the Department has the

power to order a reassessment for the year 1970 and

prior years on which taxes have been extended and

collected. The foregoing statute [Chap. 120, § 621]

clearly states that no substitute assessment shall in-

validate any prior assessment as to taxes extended

thereon. Since the taxes for the year 1970 and prior

thereto have already been extended, I am of the

opinion that the Department would not have the

power to order a reassessment for the year 1970 and

prior thereto.’’

See also People ex rel. Cannella v. City of Chicago, 7 Ill.

2d 416, 419-420, 131 N.E. 2d 98, 100 (1955); People ex rel.

Town of Cicero v. Sweitzer, 339 Ill. 28, 44, 170 N.E. 728,

734 (1930); People ex rel. Stettauer v. Olsen, 215 Tll. 620,

624, 74 N.E. 785, 786 (1905).

The law has long been settled that even an illegal tax

voluntarily paid cannot be recovered by the person pay-

ing it. Eichman v. Anderson, 23 Ill. App. 2d 329, 333, 162

N.E. 2d 673, 675 (1959) ; Davis v. Board of Education, 323

Ill. 281, 282 (1926); People ex rel. City of Highland Park

v. McKibbin, 380 Ill. 447, 452, 44 N.E. 2d 449, 451 (1942).

See also, S.A.S. Co. v. Kucharski, 53 [ll. 2d 139, 142

(1972).

In People ex rel. Eitel v. Lindheimer, 371 Ill. 367, 371, 21

N.E, 2d 318, 320 (1939), this court said :

10

‘*|. . any right to a refund or a credit of taxes is

purely of statutory origin, and in the absence of an

authoritative statute, taxes voluntarily, though erro-

neously, paid, cannot be recovered, nor even volun-

tarily refunded by a county, although there be jus-

tice in the claim.”’

Petitioner makes no allegation that in the years in dis-

pute, taxes were paid under protest as provided by statute.

(Chap. 120, § 675, § 716; Chap. 127, § 172)

In Clarendon Associates v. Korzen, 56 Ill. 2d 101, 106,

108 (1973) the court concluded that, to obtain relief when

assessment levels are disputed, the taxes must be paid un-

der protest and objections filed to the application for

judgment. Similarly, the court took pains to state in Peo-

ple ex rel. Hillison v. C.B.&Q. R.R. Co., 22 Til. 2d 88, 103

(1961) and People ex rel. Kohorst v. G.M.&O. R.R. Co.,

22 Ill. 2d 104, 114 (1961), where equalization adjustments

were allowed:

‘*.. . the amount of recovery is, of course, limited by

the amount of the protest.’’

Since all tax monies belatedly being disputed by Peti-

tioner have been collected and expended, and since

no protest payments were made, and no other statutory

procedure exists for reassessment or adjustment of past

tax years, there can be no retroactive review.

IIl.

Stripped of its ambiguities, Petitioner has really peti-

tioned the Court to direct payment of millions of dollars

from the State common school fund although no statutory

authority exists for such a procedure.

Where money claims are involved, the Illinois Court of

Claims Act, Section 8(a), Ill. Rev. Stats. 1973, Chap. 37,

§ 439.8 (a) provides:

11

‘“The Court of Claims shall have exclusive jurisdic-

tion to hear and determine the following matters:

(a) all claims against the State founded upon any

law of the State of Illinois, or upon any regulations

thereunder by an executive or administrative officer

or agency... .’’

Article VIII, Section 1(b) of the 1970 Constitution of

the State of Illinois provides:

‘“‘the State . . . shall make payments from public

funds only as authorized by law or ordinance.’’

The State Controller Act, Section 9, Ill. Rev. Stats.

1973, Chap. 15, § 209 provides:

‘‘No payment may be made from public funds held

by the State Treasurer ... except by warrant drawn

by the Controller and presented by him to the Treas-

urer ...No warrant for the payment of money by

the State Treasurer may be drawn by the Controller

without the presentation of itemized vouchers indi-

eating that the obligation or expenditure is pursuant

to law and authorized... .”’

Petitioner desires remedial and corrective changes to

existing statutes.

Only the legislature has the constitutional power to

alter the manner in which the common school fund shall

be allocated and apportioned, and in the absence of en-

abling legislation, neither the Court nor Petitioner have

discretion to distribute public funds as Petitioner seeks.

By either a public policy or a common sense test, the

conclusion to be drawn is the same: if certain school dis-

tricts outside Cook County have been unjustly enriched due

to underassessment, the proper recourse is not an action

which ignores the law and wreaks havoc upon the districts

which are in compliance with the Revenue Act and School

Code.

12

CONCLUSION

The Illinois Supreme Court has assumed jurisdiction

to prospectively resolve the problem of full value assess-

ment and equalization as provided in the Illinois statutes.

The retroactive solution advocated by Petitioner is con-

trary to law, impractical and would occasion confusion,

expense and other inequities. The Illinois Supreme Court

has properly exercised its judicial discretion.

Wherefore respondents respectfully pray that the peti-

tion for writ of certiorari to the Illinois Supreme Court

be denied.

Respectfully submitted,

Wuuum J. Scort,

Attorney General of the State of Illinois,

160 North La Salle Street,

Chicago, Illinois 60601,

Attorneys for Respondents.

Herpert Lee Capian,

Assistant Attorney General,

312/793-3587

Of Counsel.

13

No. 75-253

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1975

CLARE HARTE, on her own behalf and on behalf of all

citizens and taxpayers of Cook County, Illinois,

Plaintiff -Petitioner,

vs.

ROBERT J. LEHNHAUSEN, Former Director of the

Department of Local Government Affairs, State of Illi-

nois; MICHAEL J. BAKALIS, Superintendent of Pub-

lic Instruction, State of Illinois; and FRANK A. KIRK,

Director of the Department of Local Government Af-

fairs, State of Illinois,

Defendants-Respondents.

CERTIFICATE OF SERVICE

I, Herbert Lee Caplan, Assistant Attorney General, a

member of the Bar of the Supreme Court of the United

States, and counsel for the Respondents, hereby certify

that I have this 29th day of September, 1975, served three

copies of the Brief in Opposition to Petition for Writ of

Certiorari upon William J. Harte, Kevin M. Forde, 111

West Washington Street, Chicago, Illinois 60602, by de-

positing same, first class postage prepaid, in the United

States mail chute at 160 North LaSalle, Chicago, Ilinois.

All parties required to be served here have been served.

HERBERT LEE CAPLAN