110 Larkin LLC et al. v. Weber, 2023 IL App (3d) 210606 arose from a tax rate objection in which the Plaintiffs alleged that the Woodridge Park District (WPD) imposed an unlawful levy in 2017 that resulted in an illegal excess accumulation in its corporate sub-fund. The Plaintiffs asserted that WPD levied $3,910,740 for “corporate purposes” in 2017. The Plaintiffs contended that this 2017 levy resulted in WPD’s “corporate sub-fund” containing 3.5 times the average annual expenditure of that specific fund. Excess accumulation claims are analyzed by adding the fund’s balance at the beginning of the fiscal year and the amount of taxes that remained to be collected for the prior year’s levy for that fund. Then, the total amount of available funds is divided by the average annual expenditures from the fund of the previous three fiscal years. This calculation will provide the court with the “Miller Ratio”. Central Illinois Public Service Co. v. Miller, 42 Ill 2d 542 (1969). Courts in Illinois have found accumulation in funds to be excessive if the Miller Ratio exceeds two to three times the average annual expenditures from the fund.
WPD argued that there was not an excess accumulation of its General Fund at the time of the 2017 tax levy and the Plaintiffs’ allegations were based solely upon reviewing WPD’s “corporate sub-fund” within its General Fund rather than the General Fund as a whole. The Circuit Court granted the Plaintiffs’ motion for summary judgment finding that WPD’s 2017 tax levy was unlawful. WPD appealed and the Appellate Court reversed the Circuit Court’s decision.
The Appellate Court found that the Circuit Court erred in only reviewing WPD’s corporate sub-fund rather than examining the entirety of the General Fund to make an excess accumulation determination. The Appellate Court stated that WPD had the power to levy and collect taxes for “all corporate purposes” pursuant to 70 ILCS 120/5-1 and that “corporate purpose” is a broad concept including all direct and collateral purposes that serve the corporate body’s objectives. As such, the General Fund should have been reviewed as a whole when making a determination if there was an excess accumulation, rather than focusing solely on the corporate sub-fund. The Court found that the Miller Ratio for WPD was approximately 1:1. Therefore, there was no excess accumulation of funds by WPD.
This case decision is important for public bodies to be aware of because it indicates that corporate sub-funds within General Funds may not be found to have an excess accumulation where the public body’s sub-funds are administrative in purpose and the funds within the General Fund are utilized for a corporate purpose. Please note that we are monitoring this case for any potential appeal to the Illinois Supreme Court or updates.
If you have any questions regarding tax levies or excess accumulation challenges, please contact your Tressler attorney.