In the recent decision of Acme Markets, Inc. v. Karen Callanan, ___ Ill.2d ___, 2009 WL 3471102 (October 29, 2009), the Illinois Supreme Court reversed a lower court opinion and discarded prior Illinois appellate court opinions with regard to the validity of specific purpose levies added after the effective date of the Property Tax Extension Limitation Law (PTELL). While we believe this case will have no impact on prior levy years where objections have not been filed by taxpayers, it will significantly impact planning for the 2009 levy, as well as all subsequent levies for any fire protection districts subject to PTELL which have added special interest levies since the date their county was governed by PTELL.
What is a special purpose levy? A special purpose levy is a levy authorized by statute other than the general purposes as authorized by the Illinois Fire Protection District Act. Some of these special purpose levies -- such as ambulance and fire and rescue -- specifically by their authorization in statute required a referendum as a prerequisite to adding it to the levy request of the fire protection district. Other special purpose levies -- such as tort, pension, IMRF, and audit -- are authorized by statute, but not required by the authorizing statute to be adopted by referendum. Any special purpose levy imposed by a district subject to PTELL prior to their county being impacted by PTELL and remaining as a levy each year thereafter -- whether adopted as required by referendum or not -- are not affected by this new Illinois Supreme Court ruling.
Any special purpose levy, which was not subject to referendum and added after the PTELL date of a particular county will, in the future, no longer be considered a valid levy and will be subject to a possible tax objection. The county clerk could also refuse to extend those special purpose levies added without referendum after the PTELL date. The operative section of PTELL -- which was referred to in the Acme Markets case -- was amended in 2006. The resulting language effectively stopped the addition of all new levies without referendum as of 2006. (35 ILCS 200/18-190)
Several arguments could be made as to why this new Illinois Supreme Court case is either unfair or a misreading of the PTELL statute prior to 2006. The purpose of this article is not to further that debate, but to recognize that absent a legislative override of the court’s decision, we are governed by the new decision and must act to minimize its impact.
For those taxing bodies which have special purpose levies seemingly invalidated by this case, we would suggest levying funds for common expenditures such as pension, tort, Social Security, IMRF, and audit into the corporate or ambulance levies. This method is available for taxing bodies that have sufficient room under corporate and ambulance levies, which now have a maximum rate of .7 (.4 for corporate and .3 for ambulance). For example, if the ABC Fire Protection District has a total aggregate rate of less than .7, it would be rather simple to take its special purpose levies and include them under ambulance or corporate. However, we would also recommend keeping a minimal amount ($100) in those special purpose levies to protect them in the event of a legislative enactment, which would modify the ruling of the Illinois Supreme Court, or in the event of a later ruling by the Illinois Supreme Court, which could possibly modify the impact of the Acme Markets decision. We would encourage those districts, which are above the limitation in their general operational levies to put as much money as possible into these funds to insure that they are at their maximum rates before leaving additional sums in special purpose funds. Note that this is only a concern for special purpose levies that were added without referendum after the effective date of PTELL in their particular county.
The Acme Markets decision could have lasting effects upon the current and future levies of tax capped districts in PTELL counties. It is strongly recommended that these issues be discussed with your district attorney to soften the impact of this decision.
