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Day v. Regional Transportation Authority

OPINION FILED MAY 20, 1977.

ROBERT G. DAY, APPELLANT,

v.

REGIONAL TRANSPORTATION AUTHORITY ET AL., APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

MR. JUSTICE UNDERWOOD DELIVERED THE OPINION OF THE COURT:

Plaintiff, Robert G. Day, filed this action for declaratory judgment in the circuit court of Sangamon County against the Regional Transportation Authority (RTA) and certain State officials challenging the constitutionality of particular bonding and finance provisions of the Regional Transportation Authority Act (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 701.01 et seq.) and a related provision of the Illinois Vehicle Code which allocates to the RTA a portion of vehicle registration fees paid by Chicago residents (Ill. Rev. Stat. 1975, ch. 95 1/2, par. 2-119(d)). On motion of the RTA, the cause was transferred to the circuit court of Cook County, which entered an order granting the RTA's motion to strike and dismiss the complaint on the merits. We allowed direct appeal to this court pursuant to Supreme Court Rule 302(b). 58 Ill.2d R. 302(b).

The Regional Transportation Authority Act, which became effective in 1973, contains comprehensive provisions establishing a regional transportation authority to furnish public transportation services, facilities and funding in a six-county region consisting of Lake, McHenry, Du Page, Kane, Cook and Will counties. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 701.01 et seq.) The scope and content of the Act have been reviewed in detail in this court's decision in Hoogasian v. Regional Transportation Authority (1974), 58 Ill.2d 117, appeal dismissed for want of a substantial Federal question (1974), 419 U.S. 988, 42 L.Ed.2d 261, 95 S.Ct. 298, and need not be fully restated here. It suffices for purposes of this appeal to review briefly the pertinent provisions of the Act and related statutes pertaining to the Authority's sources of revenue and its powers to incur indebtedness.

The Act contemplates that the RTA may receive revenue from various sources. Section 4.02 empowers the Authority to apply for, receive and expend grants, loans and other funds from Federal, State and local governments, departments and agencies. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.02(a).) Pursuant to section 4.03(b) the Authority may impose a public transportation tax upon all persons engaged in the RTA region in the business of selling motor fuel at retail for operation of motor vehicles on public highways at a rate not to exceed 5% of the gross receipts from such sales. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.03(b).) The imposition of a corresponding motor fuel use tax at the same rate is also authorized. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.03(c).) In addition, the Authority may impose a motor vehicle parking tax with respect to parking facilities situated within the RTA area. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.03(d).) The Authority is also empowered to generate revenues from the operation of its transportation services and facilities through the imposition of fares and other charges. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 702.04.) Still another source of revenue is found in section 4.09 of the Act, which provides as follows with respect to the allocation of certain tax revenues from the State's general revenue fund for the use of the RTA:

"As soon as possible after the first day of each month, beginning July 1, 1974, upon certification of the Department of Revenue, the Comptroller shall order transferred and the Treasurer shall transfer from the General Revenue Fund to a special fund in the State Treasury, to be known as the `Public Transportation Fund', an amount equal to 3/32 of the net revenue realized from the `Retailers' Occupation Tax Act', as now or hereafter amended, the `Service Occupation Tax Act', as now or hereafter amended, the `Use Tax Act', as now or hereafter amended, and the `Service Use Tax Act', as now or hereafter amended, from within the metropolitan region during the preceding month. Net revenue realized for a month shall be the revenue collected by the State pursuant to such acts during the previous month from within the metropolitan region, less the amount paid out during that same month as refunds to taxpayers for overpayment of liability in the metropolitan region under such acts.

All moneys deposited in the Public Transportation Fund, whether deposited pursuant to this Section or otherwise, are allocated to the Authority. Pursuant to appropriation, the Comptroller, as soon as possible after each monthly transfer provided in this Section and after each deposit into such Fund, shall order the Treasurer to pay to the Authority out of the Public Transportation Fund the amount so transferred or deposited. Such amounts paid to the Authority may be expended by it for its purposes as provided in this Act." (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.09.)

An additional source of revenue is contained in section 2-119(d) of the Illinois Vehicle Code (Ill. Rev. Stat. 1975, ch. 95 1/2, par. 2-119(d)), which provides for allocation to the RTA of certain motor vehicle registration fees collected by the Secretary of State. The statute provides:

"Of the moneys collected as a registration fee for each motor vehicle, excluding motorcycles and motor driven cycles, registered to an owner having an address in the City of Chicago, $14 of each annual registration fee for each such vehicle and $7 of each semiannual registration fee for each such vehicle shall be deposited in the Public Transportation Fund in the State Treasury. Moneys in the Public Transportation Fund shall be allocated and paid to the Regional Transportation Authority, as provided in the `Regional Transportation Authority Act', enacted by the 78th General Assembly."

Section 4.04 of the Act contains detailed provisions relating to the RTA's power to issue and sell its negotiable bonds and notes up to a limit of $500 million. (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.04.) Section 4.04(c) provides that all bonds and notes of the Authority shall be general obligations of the Authority secured by its full faith and credit and that "[n]o such bonds or notes shall constitute a debt of the State of Illinois." (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.04(c).) Bonds and notes shall be secured as provided in the authorizing ordinance, "which may include in addition to any other security, a specific pledge of and lien on any or all tax receipts of the Authority and on any or all other revenues or moneys of the Authority from whatever source which may by law be utilized for debt service purposes." (Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.04(c).) Bonds and notes may also be issued with provision for the creation of a separate fund to provide for their payment and for deposit in such fund from any and all tax receipts of the Authority and other revenues. The principal question raised on this appeal concerns the legal effect of the following provisions contained in section 4.04(e):

"The State of Illinois pledges to and agrees with the holders of the bonds and notes of the Authority issued pursuant to this Section that the State will not limit or alter the rights and powers vested in the Authority by this Act so as to impair the terms of any contract made by the Authority with such holders or in any way impair the rights and remedies of such holders until such bonds and notes, together with interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of such holders, are fully met and discharged. In addition, the State pledges to and agrees with the holders of the bonds and notes of the Authority issued pursuant to this Section that the State will not limit or alter the basis on which State funds are to be paid to the Authority as provided in this Act, or the use of such funds, so as to impair the terms of any such contract. The Authority is authorized to include these pledges and agreements of the State in any contract with the holders of bonds or notes issued pursuant to this Section." Ill. Rev. Stat. 1975, ch. 111 2/3, par. 704.04(e).

Plaintiff's initial contention is that the issuance of bonds by the RTA constitutes the creation of "State debt" in violation of the following provisions of section 9 of article IX of the 1970 Illinois Constitution:

"(a) No State debt shall be incurred except as provided in this Section. For the purpose of this Section, `State debt' means bonds or other evidences of indebtedness which are secured by the full faith and credit of the State or are required to be repaid, directly or indirectly, from tax revenue and which are incurred by the State, any department, authority, public corporation or quasi-public corporation of the State, any State college or university, or any other public agency created by the State, but not by units of local government, or school districts.

(b) State debt for specific purposes may be incurred or the payment of State or other debt guaranteed in such amounts as may be provided either in a law passed by the vote of three-fifths of the members elected to each house of the General Assembly or in a law approved by a majority of the electors voting on the question at the next general election following passage. Any law providing for the incurring or guaranteeing of debt shall set forth the specific purposes and the manner of repayment.

(f) The State, departments, authorities, public corporations and quasi-public corporations of the State, the State colleges and universities and other public agencies created by the State, may issue bonds or other evidences of indebtedness which are not secured by the full faith and credit or tax revenue of the State nor required to be repaid, directly or ...


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