ROCKFORD SCHOOL TAX PROTEST HOME PAGE

Following eight years of legal challenges by Rockford, Illinois, school district taxpayers, the Illinois Supreme Court has ruled that the Illinois Local Governmental and Governmental Employees Tort Immunity Act, 745 ILCS 10/1-101 et seq. (2000) ("Tort Immunity Act"), does not authorize taxes or bonds for school desegregation suit equitable remedies. See In re Consolidated Objections to Tax Levies of School District No. 205 for the Years 1991 through 1996, 193 Ill.2d 490, 739 N.E.2d 508, 250 Ill.Dec. 745 (Illinois Supreme Court No. 88267, filed October 26, 2000), aff'g, 306 Ill.App.3d 1104, 715 N.E.2d 1212, 240 Ill.Dec. 155 (2d Dist. 1999).

Affirming Circuit Judge John Rapp's two major issue summary judgment rulings in favor of the taxpayers (See Judge Rapp's Memorandum Opinion on Cross Motions for Summary Judgment entered November 4, 1997 (in ASCII format) and Judge Rapp's Memorandum Opinion on Cross Motions for Summary Judgment entered February 5, 1998 (in ASCII format). as well as the Second District's interlocutory appeal opinion, the Illinois Supreme Court held that injunctive or equitable remedies are not "compensatory damages" within the meaning of Section 9-102 of the Tort Immunity Act. Therefore, the tax levy and bonding provisions of the Tort Immunity Act were unavailable to fund those remedies.

That ruling comes after the Rockford School District has already collected over $140 million in such "tort taxes" and after the District has incurred an additional $73 million in debt (bonds and certificates of participation) predicated upon its ability to pay that debt with Tort Immunity Act taxes.

The taxpayers' attorney and the District have agreed to a SETTLEMENT AGREEMENT (which you may view in .pdf format if you have the Adobe Acrobat Reader 5.0) refunding over $30 million to the thousands of Rockford taxpayers who have joined in the annual tax objection proceedings since 1991. The tort tax refund estimates have been calculated and posted on the Internet (although the District is still in the process of re-checking those estimates). For the taxpayers' attorney's estimate of the refund due on any specific property, refer to the Property Tax Refund Estimate web site.

The Supreme Court held that taxes under the Tort Immunity Act were only authorized for "compensatory damages," not equitable remedies, because "the plain meaning of the term 'compensatory damages' is a monetary award paid to a person as compensation for loss or injury." In other words, a local governmental body may use taxes under the Act to pay money damages to another party, but it may not retain those taxes to fund its governmental programs even if those programs are ordered in the form of equitable relief. Noting that Section 2-l0l of the Tort Immunity Act states "[n]othing in this Act affects the right to obtain relief other than damages against a local public entity or public employee," the Court held that "[t]he phrase 'relief other than damages' contained therein refers to injunctive relief."

The Court stated that the underlying purpose of the Tort Immunity Act was to deal with the abolition of sovereign immunity under which "local government units had immunity from the 'payment of damage claims.'" "The Tort Immunity Act was therefore enacted to deal with damages remedies. Thus, the purpose underlying the Tort Immunity Act and its provisions as a whole . . . reinforce our construction of the term 'compensatory damages' as excluding . . . injunctive remedies."

Judge Rapp held that his ruling also applies to the taxes levied after the School District was found guilty. Although the School District had argued taxpayers were precluded from challenging those later taxes by principles of res judicata and collateral estoppel, Judge Rapp held taxpayers were entitled to their "own day in court" and that the taxes were illegal under state law even if the federal court had ordered the levy. See Judge Rapp's Memorandum Opinion on Cross Motions for Summary Judgment entered February 5,1998 (in ASCII format).

This victory for taxpayers comes after a long, difficult battle, which is not yet finished. Each year between 1992 and 1997, the Rockford federal district court assumed jurisdiction over the taxpayers' state court objections at the request of the School District. In 1996 the federal district court ruled that the taxes were valid under state law. See In re Application of the County Collector, 918 F.Supp. 235 (N.D. Ill. 1996). The taxpayers appealed, and on September 16, 1996, the United States Court of Appeals for the Seventh Circuit in Chicago reversed the district court and held that the taxpayers were entitled to have the state tax law issue decided by the state court. In re Application of the County Collector (Appeal of O'Brien, et al.), 96 F.3d 890 (7th Cir. 1996).

In a prior appeal the Seventh Circuit had held that taxpayers were not entitled to intervene directly into the school desegregation suit to challenge the taxes but that they are entitled to challenge the legality of the taxes in the separate tax objection proceedings and that (as Judge Rapp also later held) they are not bound by the tax rulings made in the separate desegregation suit. People Who Care v. Rockford Board of Education (Appeal of O'Brien), 68 F.3d 172 (7th Cir. 1995). Thus, Rockford taxpayers have established their right to challenge the legality of these judicial taxes in state court as a matter of state law.

On April 18, 2001, the United States Court of Appeals for the Seventh Circuit finally brought the underlying school desegregation case to an end in People Who Care v. Rockford Board of Education, ___ F.3d ___, 2001 WL 388935 (7th Cir., April 18, 2001) (pet. for rehearing pending). Just two years earlier, on April 15, 1997, the Seventh Circuit had reversed major segments of the so-called "Comprehensive Remedial Order" in the underlying school desegregation case. Chief Judge Richard Posner wrote eloquently regarding why it was wrong for Magistrate P. Michael Mahoney to order racial quotas for teachers, to prohibit ability tracking of students, to order the School Board to close the achievement gap between white and minority students, to require "racial disciplinary quotas" and to prescribe the racial composition of cheerleading squads. People Who Care v. Rockford Board of Education, 111 F.3d 528 (7th Cir. 1997). Unfortunately, probably because of the judicial taxation temptations described in attorney O'Brien's Heritage Foundation presentation (see below), the School Board failed to appeal many other aspects of the CRO, including the forced busing plan, oxymoronically referred to as "Controlled Choice," which went into effect in the fall of 1997.

In 1999 the School Board and individual members of the Board ordered to "vote" for these tax levies lost a Seventh Circuit appeal, but the Seventh made clear it wanted this desegregation suit brought to an end. See People Who Care v. Rockford Board of Education, 171 F.3d 1083 (7th Cir. 1999). Now the Seventh Circuit has ended this case. Many believed that was unlikely to happen in any meaningful sense (i.e., a so-called "unitary status" decree leaving the remedies and taxes in place hardly ends things) unless and until this judicial taxation had been ended, and the Illinois Supreme Court's recent ruling that the taxes are illegal finally accomplished that.

The federal judge's taxes have been staggering and have had their effect on Rockford. During the last five years Rockford has always had one of the very highest real estate tax rates in the nation. Currently (2001), Runzheimer International reports that Rockford has the highest real estate tax rate in the nation -- a whopping 3.42% of fair market value. Runzheimer reported that in 1997 Rockford had the third highest metropolitan property tax rate in the nation, and in 1996 Rockford had the second highest property tax rate (3.51%) according to Runzheimer. By comparison, Chicago's rate is only 2%, and Springfield's is only 2.4%.

For the last several years, the owner of a $150,000 Rockford home has paid about $800 per year in property taxes just for the remedies in this single lawsuit -- more than twice as much as the homeowner pays for the entire county government structure.

A local citizens group called Rockford Educating All Children (R.E.A.CH.), P.O. Box 1505, Rockford, IL 61110 (815-334-7626) has been instrumental in organizing and supporting the tax protest.

Although many people are obviously concerned about judicial taxation as "taxation without representation," not many understand the precise legal bases for the court tax protest. This home page (of the taxpayers' pro bono attorney, Michael F. O'Brien) makes available the various briefs filed on behalf of the taxpayers.

Perhaps these briefs and related materials will contribute to public understanding of the delicate balance which must be maintained to insure justice for all, including taxpayers.

You may view Taxpayers' Brief filed with the Illinois Supreme Court in Corel WordPerfect Suite 8 format

Or you may view Taxpayers' Brief filed with the Illinois Supreme Court in HTML format

You may view Taxpayers' Seventh Circuit Brief in ASCII format

Or you may view Taxpayers' Seventh Circuit Brief in WordPerfect 5.1 format

You may view Taxpayers' Seventh Circuit Reply Brief in ASCII format

Or you may view Taxpayers' Seventh Circuit Reply Brief in WordPerfect 5.1 format

You may view Taxpayers' Brief on the 1991-93 taxes filed with Judge Rapp in ASCII format

Or you may view Taxpayers' Brief on the 1991-93 taxes filed with Judge Rapp in WordPerfect 5.1 format

You may view Taxpayers' Reply Brief on the 1991-93 taxes filed with Judge Rapp in ASCII format

Or you may view Taxpayers' Reply Brief on the 1991-93 taxes filed with Judge Rapp in WordPerfect 5.1 format

You may view Taxpayers' Brief on the 1994-96 taxes filed with Judge Rapp in ASCII format

Or you may view Taxpayers' Brief on the 1994-96 taxes filed with Judge Rapp in WordPerfect 5.1 format