Appeal from the Circuit Court of Kane County. No. 93-CH-0185. Honorable R. Peter Grometer, Judge, Presiding.
Released for Publication July 19, 1994.
McLAREN, Doyle, PECCARELLI
The opinion of the court was delivered by: Mclaren
JUSTICE McLAREN delivered the opinion of the court:
Plaintiff, North Pole Corporation, sued for a declaratory judgmentthat an amusement tax enacted by defendant, the Village of East Dundee (the Village), is unconstitutional and void. Plaintiff appeals interlocutorily (134 Ill. 2d R. 307(a)) the denial of a preliminary injunction that would prevent the enforcement or collection of the tax pending the outcome of the litigation. On appeal, plaintiff argues that the trial court abused its discretion in denying it preliminary injunctive relief. We affirm.
Plaintiff is a for-profit corporation that operates an amusement park, the Three Worlds of Santa's Village, within the corporate limits of East Dundee, a non-home-rule municipality. On May 3, 1993, the village enacted Ordinance No. 93-5, effective June 1, 1993, imposing a 5% tax on the admission charge paid by "every person who pays a charge for admission to an Amusement" within defendant's corporate limits. The tax is to be collected from the consumer at the time the admission charge is collected. Every person who receives an admission charge on which a tax is levied per the ordinance has a duty to act as trustee for defendant and to pay proceeds from the tax to the Village treasurer. The Village may suspend or revoke the Village licenses of amusement operators who willfully fail to turn over proceeds from the tax.
The ordinance defines "amusement" as "any theatrical, dramatic or musical performance, circus, rodeo, animal act, athletic contest, sport, or similar exhibition or activity in which an attendee participates" and for which there is an admission fee or other charge for spectators or participants. Amusements staged by Federally tax-exempt nonprofit organizations, school districts, or governmental entities are exempt from the tax. There is no dispute that plaintiff's business is an "amusement" under the ordinance.
Plaintiff's four-count complaint for declaratory and injunctive relief alleges the following facts. The Three Worlds of Santa's Village consists of Santa's Village, an amusement park and picnic area; Racing Rapids, a water park; and the Polar Dome, an ice-skating rink. Santa's Village and Racing Rapids, which operate primarily in the summer, each charge an admission fee to the public. In 1992, this charge was $10.95 per person per visit, or $15.95 per person per visit for admission to both attractions. The Polar Dome charges $4.50 per person for admission. Because of the weak economy, these charges have not gone up for the last several years even though plaintiff has experienced operating losses.
According to the complaint, plaintiff already pays substantial Village taxes (about $27,000 in 1992) even though plaintiff uses few Village services. Plaintiff requires no extraordinary police or fire services, does not receive garbage collection service from the Village, and, in 1992, reimbursed the Village about $26,000 for water and sewage service.
The complaint alleges further that, although the ordinance is phrased generally to apply to all "amusements," remarks of Village trustees demonstrate that the Village enacted the ordinance in the realization that plaintiff would be the only entity that would in fact be subject to the tax. Also, although the ordinance does not specify any particular use for the funds collected thereunder, the purpose of the tax, as evidenced by remarks by Village trustees, was to raise money to finance a new sewage treatment plant. This capital improvement will benefit all the inhabitants and businesses of East Dundee and will confer no special benefit on plaintiff.
According to the complaint, the new tax will severely increase plaintiff's municipal tax burden. The chairman of the Village finance committee estimated that plaintiff will pay an extra $170,000 annually under the ordinance; thus, its tax liability would increase by 500% to 600% over the previous year. The extra liability would harm plaintiff, which could either absorb the charge or raise ticket prices and thereby lower attendance and revenues in its extremely price-sensitive market.
According to the complaint, the amusements tax is invalid for several reasons. First, because the tax requires plaintiff to bear the entire burden of the tax without receiving any remotely proportional corresponding benefit, the tax violates Federal and State guarantees of equal protection. (U.S. Const., amend. XIV; Ill. Const. 1970, art. I, § 2.) Second, this alleged discrimination violates the uniformity clause of the Illinois Constitution. (Ill. Const. 1970, art. IX, § 2.) Third, because the ordinance requires plaintiff to bear a disproportionate share of the cost of the capital improvement for which the tax revenues are intended, it is an impermissible special assessment. 65 ILCS 5/9-2-45. (West 1992).
In moving for preliminary injunctive relief, plaintiff alleged that, without a preliminary injunction forbidding the collection of the tax until this suit was resolved, plaintiff would suffer irreparable injury for which it had no adequate remedy at law. The increased price of admission would result in greatly reduced attendance and thus lower revenues in this highly price-sensitive market. The loss of customers and goodwill could not readily be quantified. Also, if the court later invalidated the tax, plaintiff would have no efficient means to return the improper charges to its patrons. For this latter reason, the balance of equities also supported granting a preliminary injunction; if the Village prevailed on the merits of the suit after the collection ofthe tax was preliminarily enjoined, plaintiff's attendance records would enable it to calculate easily how much money was due.
The court held a hearing on the motion for a preliminary injunction. Plaintiff's first witness was Philip Oestreich, executive vice-president and 50% owner (with Hugh Wilson owning the other 50%) of plaintiff. Oestreich testified that plaintiff's revenue comes primarily from the standard admission charge for Santa's Village and Racing Rapids of $10.95 per person (or $15.95 for a combined ticket), although plaintiff also negotiates per-person prices with customers for large picnic outings on its grounds. In 1989, the prices for a single ticket and a combined ticket were, respectively, $8.95 and $13.95; for the ...