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City of East St. Louis v. East St. Lois Financial Advisory Authority

December 16, 1999

THE CITY OF EAST ST. LOUIS, APPELLANT, V. THE EAST ST.
LOUIS FINANCIAL ADVISORY AUTHORITY, APPELLEE.



The opinion of the court was delivered by: Justice Heiple

Agenda 35-September 1999.

This case presents two issues: first, whether the Financially Distressed City Law (hereinafter, the Act) (65 ILCS 5/8-12-1 et seq. (West 1996)) empowers a "Financial Advisory Authority" to impose a budget upon a financially distressed city after that city fails to adopt a satisfactory budget; and second, whether the East St. Louis Financial Advisory Authority (the Authority) acted in an arbitrary and capricious manner in rejecting the second of two proposed city budgets submitted by the City of East St. Louis (the City). For the reasons that follow, we hold that the Act does not empower a Financial Advisory Authority to impose a budget upon a city; however, we also hold that the Authority did not act in an arbitrary and capricious manner when it rejected the City's second proposed budget.

BACKGROUND

Following the enactment of the Financially Distressed City Law in 1990, the City adopted an ordinance requesting that it be designated a financially distressed city under the Act. Consistent with that designation, the City thereafter has been required each year to submit its annual budget, after adoption by the City, to the Authority for approval. 65 ILCS 5/8-12-16 (West 1996).

In accordance with the statutory procedure, on November 12, 1997, the City adopted a budget for 1998 and submitted it to the Authority for its approval. On November 22, 1997, the Authority rejected the City's first proposed budget and returned it to the City for correction. The Authority listed several reasons for its rejection of the budget: (1) the City's revenue estimates failed to comply with the estimates approved by the Authority; (2) the budget failed to separate grants and special revenues; (3) the salaries of certain city employees were improperly charged to the Motor Fuel Tax Fund; (4) the budget failed to comply with certain requirements of the federal "COPS FAST" grant program; (5) several budget items, including "electricity," "vehicle maintenance," "unemployment insurance," "overtime," and "sewer maintenance," were underfunded; and (6) the budget improperly failed to fund the position of a fire department lieutenant who was then on active military leave.

On December 7, 1997, the City adopted a revised budget and submitted that budget to the Authority for approval. On December 20, 1997, the Authority rejected the City's revised budget. According to the Authority, the revised budget still failed to fully comply with the requirements of the federal COPS FAST grant program. In particular, under the revised budget, the City proposed to fund certain vacant police officer positions in the budget while other officers would be paid with federal grant money. Thus, the City was proposing to pay eight officers with grant money while at the same time cutting back on the number of officers being paid by the City and using the salary savings for other purposes. This, according to the Authority, was a violation of the "maintenance of effort" requirement of the grant program and rendered the City's budget inconsistent with the City's three-year financial plan. Moreover, the Authority noted that several budget line items, including electricity, unemployment insurance, overtime, sewer maintenance, and vehicle maintenance, remained underfunded in the revised budget. The Authority stated that the underfunding of these items rendered the budget not reasonably capable of being achieved.

In addition to the above defects, the Authority alleged new problems with the City's revised budget. First, the revised budget proposed to fund $400,000 in maintenance work with sewer revenues that had never generated more than $100,000. Second, the Authority concluded that the City's proposed $200,000 reduction in the amount budgeted for the public library was unlawful because it improperly reduced the library's proportionate share of the City's personal property tax replacement funds from 23% to 7%.

At the Authority's December 20 meeting, immediately after the roll- call vote rejecting the City's second budget, the members of the Authority discussed how to proceed with respect to the City's budget. First, the Authority could simply allow its rejection of the budget to stand and take no further action. Second, the Authority could act pursuant to its statutory authority to intercept funds due to the City from the state. 65 ILCS 5/8-12-21(2) (West 1996). Third, the Authority could simply impose a budget of its own making upon the city. A copy of the Authority's proposed budget, which had already been prepared by the Authority's staff, was distributed among the Authority's members. After hearing comments from several of the Authority's directors who expressed the opinion that intercepting state payments was too harsh a remedy, the Authority unanimously voted to impose its budget on the City.

On December 24, 1997, the City filed a complaint against the authority requesting that the circuit court of St. Clair County enjoin the Authority from intercepting payments due the City from the state Treasurer, and further requesting that the court declare the Authority's imposition of a budget on the City to be "void, unconstitutional, improper and otherwise contrary to law ab initio." On December 30, 1997, the City obtained new counsel and filed an amended complaint. On December 31, 1997, the court entered an order whereby the parties agreed to operate under the Authority's proposed budget, except that the City was required to operate under its own proposed budget regarding the layoff of employees. The Authority also agreed not to intercept any funds due to the City from the state Treasurer. The agreement also required the parties to continue to negotiate in good faith to obtain an approved budget.

On April 15, 1998, the City filed a four-count second-amended complaint. In count I, the City sought a declaration that the Financially Distressed City Law did not permit the Authority to impose a budget on the City. The City also requested that the Authority be enjoined from imposing its budget on the City. Count II requested that the court find that the Authority acted arbitrarily and capriciously when it rejected the City's second proposed budget. Count III, entitled "Petition for Writ of Certiorari," requested that the court review the decision of the Authority to reject the City's proposed budget and impose its own budget on the City. Count IV requested injunctive relief prohibiting the Authority and its agents from taking certain steps to implement the budget.

On April 17, 1998, the court entered an order denying the City relief, stating that the Authority had not acted arbitrarily and capriciously in rejecting the City's budget, and that the Authority had not acted beyond the scope of its powers in imposing a budget on the City. The appellate court affirmed. No. 5-98-0288 (unpublished order under Supreme Court Rule 23). We granted the City's petition for leave to appeal and now affirm in part and reverse in part.

ANALYSIS

I. The Imposition of Budget by the Authority

The City argues that the appellate court erred in holding that the Act permitted the Authority to impose a budget of its own making on the City. The City points out that no provision of the statute expressly confers such a power on the Authority, and further argues that it would be improper to infer such an important power from the more general enabling language of the statute. The Authority, in contrast, argues that this court should infer the power to impose a budget from statutory language granting the Authority "all powers necessary to meet its responsibilities and to carry out its purposes and the purposes of this Division." 65 ILCS 5/8-12-6(b) (West 1996). The Authority argues that such an inference is proper in light of the broad remedial purposes of the Act.

This court has consistently held that the starting place in interpreting the meaning of a statute is to ascertain and give effect to the legislative intent in enacting the statute. See, e.g., Balmoral Racing Club, Inc. v. Illinois Racing Board, 151 Ill. 2d 367, 390 (1992); Fumarolo v. Chicago Board of Education, 142 Ill. 2d 54, 96 (1990); People v. Madison, 121 Ill. 2d 195, 200 (1988). " ` "This is to be done primarily from a consideration of the legislative language itself, which affords the best means of [the statute's] exposition ***." ' " Maloney v. Bower, 113 Ill. 2d 473, 479 (1986), quoting Franzese v. Trinko, 66 Ill. 2d 136, 139 (1977), quoting Western National Bank v. Village of Kildeer, 19 Ill. 2d 342, 350 (1960). We are also mindful that "[w]e should not attempt to read the statute other than in the manner in which it was written." Kozak v. Retirement Board of the Firemen's Annuity & Benefit Fund, 95 Ill. 2d 211, 215 (1983).

Thus, in determining whether the Act permitted the Authority to impose a budget on the City after the City allegedly failed to adopt a satisfactory budget on its own, we must look first to the language of the statute itself. Section 8-12-16 of the Act describes the role which the legislature intended for the Authority to have in the budgetmaking process:

"The financially distressed city shall develop, adopt and submit to the Authority *** an annual Budget for each *** fiscal year. After adoption by the city, the city shall submit each Budget to the Authority for its approval not later than 60 days prior to the commencement of the fiscal year to which the Budget relates. The Authority shall approve or reject the Budget not later than 30 days prior to the commencement of the fiscal year. No Budget shall have force or effect without approval of the Authority. Each Budget shall be developed, submitted, approved and monitored in accordance with the following procedures:

(1) Each Budget submitted by the financially distressed city shall be based upon revenue estimates approved or prepared by the Authority ***.

(2) Each Budget shall contain such information and detail as may be prescribed by the Authority. ***

(3) The Authority shall approve each Budget if, in its judgment, the Budget is complete with respect to providing a detailed accounting of revenues and expenditures, is reasonably capable of being achieved, will meet the requirement [of being balanced] set forth in Section 8-12-14, and will be consistent with the Financial Plan in effect. Otherwise, the Authority shall reject the Budget. *** No Budget submitted by the financially distressed city shall be arbitrarily or capriciously rejected by the Authority. Any rejection by the Authority of any Budget submitted by the city shall be in writing and shall state the reasons for the ...


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