APPEAL from the County Court of Cook County; the Hon. EDMUND
K. JARECKI, Judge, presiding.
MR. JUSTICE SCHAEFER DELIVERED THE OPINION OF THE COURT:
Rehearing denied January 20, 1953.
The county court of Cook County sustained the objections of S.L. Fleetwood to the application of the county collector for judgment and order of sale on account of 1948 taxes levied by the city of Chicago, and entered judgment in favor of the taxpayer for the amount by which his taxes, which had been paid under protest, were found to be excessive. The collector appeals. Numerous objections are involved.
THE "INTERFUND CREDITS" OBJECTION
Objection No. 1 presents the issue we have this day decided in People ex rel. Brenza v. Edwards, ante, p. 513. Certain items of the tax levies of the city for the years 1939, 1940, 1941, and 1942 were ultimately adjudicated to be invalid long after the appropriations for the year in question had been spent. The city had distributed the taxes which it received among its various funds in the proportions which the levy for each fund bore to the levy for all funds. As in the Edwards case, the objector here contends that this method of distribution resulted in overpayments to some funds, and underpayments to others, which gave rise to interfund obligations, and that the failure of the city to recognize these interfund obligations resulted in excessive levies on behalf of the funds to which underdistributions had been made. It is unnecessary to state here the history of each of the tax levies involved, or the detailed contentions of the parties, because the basic theory which underlies this objection is disposed of by our opinion in the Edwards case. We there held that the method of distribution of tax collections which was used by the city in this case is the method contemplated by statute and that the asserted interfund obligations do not exist. It follows that the county court erred in sustaining this objection.
THE "BALANCE SHEET" OBJECTIONS
The county court sustained a series of objections based on differences between the estimated amounts of various assets as stated in the annual appropriation ordinance passed December 13, 1947, and the actual amounts of those assets as of the close of the year 1947 as shown by the city comptroller's annual report for that year. The collector takes the position that the comptroller's annual report was not admissible to disprove the validity of the estimates contained in the 1948 annual appropriation ordinance.
Under section 22-1 of the Revised Cities and Villages Act (Ill. Rev. Stat. 1947, chap. 24, par. 22-1,) a municipality with a population of more than 500,000 is required to pass an annual appropriation ordinance within the last sixty days of each fiscal year. The appropriation ordinance must contain estimates of all current assets and liabilities of each municipal fund as of the beginning of the fiscal year for which the appropriations are made, as well as detailed estimates of taxes to be levied. To assist the corporate authorities in making the required estimates, the legislature has directed the city comptroller to submit, on or before the first of November, balance sheets showing assets and liabilities as it is estimated they will exist at the beginning of the next fiscal year. (Ill. Rev. Stat. 1947, chap. 24, par. 9-68.) The comptroller may submit revised estimates at any time prior to the passage of the annual appropriation ordinance.
In accordance with the statute, the comptroller submitted estimates to the city council on November 1, 1947, and revised estimates on December 13, 1947. These estimates were adopted by the city council and incorporated in the 1948 appropriation ordinance passed December 13, 1947.
Section 7-21 of the Municipal Code of Chicago requires the comptroller to prepare, on or before April 1 of each year, an annual report, certified by a public accountant, showing the financial condition of the city for the preceding year. This report, for the year 1947, shows variances between the city's estimated financial condition as shown in the appropriation ordinance, and its actual condition at the close of the year.
The collector contends that the statutory scheme precludes the use of exact figures in drawing up the annual appropriation ordinance; that the statute requires that estimates be made and used in the preparation of the appropriation ordinance; that the ordinance must be passed in advance of the close of the fiscal year, at a time when exact figures do not exist, and that the annual report cannot be used to disprove the estimated amounts. On the other hand, the objector, pointing out that the tax levy ordinance was not adopted until January 23, 1948, at which time the actual fiscal status as at the close of 1947 was known or ascertainable, argues that the 1947 report was admissible to prove the exact value of assets, and that objections to taxes must be sustained to the extent that actual assets exceeded estimated assets.
The objector's position is not sound. It is impractical, and it completely negatives the statutory provisions governing annual appropriation ordinances. The objector admits, as he must, that the appropriation ordinance must be passed before the end of the year and therefore must necessarily be based on estimates. He argues, however, that inasmuch as the tax levy ordinance was passed after the beginning of the new fiscal year, the estimates incorporated in the appropriation ordinance should have been disregarded when the levy ordinance was adopted and the figures which come to the knowledge of the corporate authorities only after an audit of the funds should have been substituted for the estimates. This argument, however, completely disregards the statutory requirement that the tax levy ordinance must be based upon the specific appropriations set forth in the appropriation ordinance. (Ill. Rev. Stat. 1947, chap. 24, par. 16-1.) It disregards also the fact that the conditions under which an appropriation ordinance may be amended are severely restricted. Amendment is permitted only at the next regular council meeting occurring not less than five days after final passage of the appropriation ordinance, except that during an additional fifteen-day period an item of appropriation may be repealed or reduced in amount.
People ex rel. Schlaeger v. Bunge Brothers Coal Co. 392 Ill. 153; People ex rel. Schlaeger v. Frankenstein & Co. 396 Ill. 524; People ex rel. Nelson v. Ridge Country Club, 399 Ill. 46; and People ex rel. Nelson v. Beu, 403 Ill. 232, cases which contain references to the duty of the city council to procure accurate figures for use in the annual appropriation ordinance, do not apply here. Those cases involved appropriation ordinances prepared prior to 1947 under a statute which required that the appropriation ordinance be passed within the first sixty days of each fiscal year. (Ill. Rev. Stat. 1945, chap. 24, par. 22-1.) Prior to 1947 the comptroller was required to submit revised estimates within the first fifteen days of each fiscal year. Under that statute the appropriation ordinance was not required to be adopted until late in February, by which time exact figures could be ascertained. Under the present statutory scheme, it is impossible to ascertain the exact figures, and so the use of estimates is specified.
The parties have argued this objection in terms of the admissibility of the comptroller's annual report. In our view the issue is not to be so determined. The false or fraudulent character of an estimate could never be shown unless proof of the actual result was available to serve as a measure of the accuracy of the predicted result. For that purpose, the annual report, like any other relevant evidence, is admissible. But such an objection is not established merely by a showing of a difference between the prediction and the result. Municipal government does not come to a stop during the days which elapse from the passage of the annual appropriation ordinance to the close of the year. Assets are collected and liabilities are paid. By necessity the estimates required by statute demand some speculation, and it is only reasonable to expect some error. The objector's contention, predicated upon an assumed requirement of precise accuracy, is not tenable.
Objections Nos. 2, 8, 14, 23, and 24, all based on the proposition that the estimates made by the corporate authorities in preparing the 1948 appropriation and levy ordinances must be exact, were improperly sustained. Since the same reasoning applies to an overestimate of a fund liability, objection No. 12 pointing to an overstatement of accounts payable by the relief fund also was improperly sustained.
Objection No. 21 charged that the city council failed to consider as an appropriable asset in the 1948 budget, the sum of $942,692.77 which consisted of cash representing collections of taxes for the years 1942 through 1944, which had been received from the county collector but had not yet been distributed to the various city funds on account of which the taxes were levied. This cash was in the city treasury well in advance of the time the appropriation ordinance was adopted; it was the duty of the city treasurer to distribute it to the proper funds, and it should have been shown as available in those funds. (People ex rel. Toman v. Baltimore & Ohio & Chicago Railroad Co. 381 Ill. 585.) The collector argues that this cash asset was included in the item of net taxes receivable, which was estimated for the various city funds, and that what is here involved is therefore the misnomer rather than the omission of an asset, pointing out that when a distribution of this cash is made to the various funds, the item of net taxes receivable for each fund will be reduced by an amount equal to the cash distribution, and the total assets will not be changed. Cash in the treasury when the estimates are made, however, is a matter of fact rather than opinion, and it must be accurately reflected. (People ex rel. Nelson v. Beu, 403 Ill. 232, 243; People ex rel. Nelson v. Ridge Country Club, 399 Ill. 46, 51.) Objection No. 21 was properly sustained.
Objection No. 22, like Objection No. 21, is predicated upon the alleged failure of the city council to take into account an appropriable cash asset in the computation of its 1948 tax levy requirements. The asset in question is the sum of $109,139.60, which the comptroller's report of operations for the year 1947 shows to have been received prior to January 1, 1948, by reason of the prepayment of various city license fees for the year 1948. The objector contends that the failure of the city to take this cash into account makes the corporate fund levy invalid to the extent of $109,139.60.
There is a surface similarity between this objection and Objection No. 21. But the differences are significant. In sustaining Objection No. 21 we noted that cash in the treasury when the estimates are made is a matter of fact and must be accurately reflected. The cash there involved was shown to be in the city treasury well in advance of the time the 1948 estimates were made. Here there is no showing that any cash on account of ...