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Lawsuit could blast a $250 million hole in county budget

Monday, August 06, 2018
Crain's Chicago Business
by Greg Hinz

GREG HINZ ON POLITICS
 UPDATED 21 HOURS AGO

Lawsuit could blast a $250 million hole in county budget

A coalition of road builders contends taxes are being improperly diverted from transportation-related matters.

Bloomberg

Cook County collects taxes including $91.5 million a year on gasoline and diesel fuel.

A lawsuit threatens to put some major pain on Cook County, potentially impounding much, and perhaps almost all, of the $250 million or more the county collects from taxes involving cars and trucks.

The suit, filed by a coalition of road builders with tacit union backing, contends the county is improperly diverting to general use taxes on autos and auto-related items such as title transfers and parking garages that are supposed to go solely to transportation-related matters under terms of the2016 Safe Roads “lockbox” amendment to the Illinois Constitution.

 Cook County responds that it is following the law. It seeks to dismiss the suit, and Circuit Court Judge Peter Flynn is scheduled to hear that motion Aug. 24.

   As the first known legal test of the lockbox amendment, the case ultimately may be headed to the Illinois Supreme Court, with one the law firms involved in the case being well-known to court watchers.

The amendment was overwhelmingly approved by voters in the 2016 general election after a TV ad blitz funded by road builders and a group connected to the International Union of Operating Engineers, whose political action committee recently donated $500,000 to state Sen. Sam McCann’s third-party candidacy for governor.

 The amendment stated that all money collected from taxes on the use, registration or fuel for transportation vehicles must be spent directly on transportation or on “direct program expenses” to support transportation, such as road repairs and safety programs.  Cook County puts at least $250 million in such taxes into a “public safety fund” that fails the new constitutional test, the suit contends, pointing to taxes including $91.5 million a year on gasoline and diesel fuel, more than $120 million a year on title transfers, and $47 million on parking lots and garages.

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     The suit further argues that road congestion “is devastating” the county and the transportation network “is failing” from lack of investment.

   Plaintiffs in the case have retained the law firm of Tabet DiVito & Rothstein, which represented retired teachers in a case that several years ago overturned new limits on spending that were adopted by the Illinois Legislature. The attorney on the case, John Fitzgerald, told me it intentionally does not apply to general sales taxes on items that happen to include gasoline, but that the $250 million figure could rise after discovery in the case.

READ THE LAWSUIT

Illinois Road & Transportation Builders Association et al. v. Cook County

ILLINOIS ROAD & TRANSPORTATION BUILDERS ASSOCIATION ET AL. V. COOK COUNTY >

   The county is being represented by State’s Attorney Kim Foxx’s office, but the immediate problem of what to do if the funds disappear—$250 million a year is a bit more than what the county’s defunct tax on sweetened beverages would have garnered—will have to be resolved by County Board President Toni Preckwinkle.

  “It is the county’s position that the plaintiffs lack standing to bring forward this litigation; further, that the county’s allocation of revenue is proper under the Illinois Constitution, the constitutional amendment’s legislative history and the ballot summary provided to voters,” said Preckwinkle's spokesman.

    Mike Sturino, president and CEO of the lead plaintiff in the case, the Illinois Road & Transportation Builders Association, said Cook County is the first group he’s sued, but other actions may be coming, including one against the state.  The city of Chicago is not on the list now because it spends “a lot of money” on things such as Chicago Transportation Authority projects that Cook County does not.

   “It’s up to the county to properly allocate their resources,” Sturino told me in an interview. “It’s up to the county to ensure they’re in total compliance with the constitution.”

   One county commissioner, Evanston Democrat Larry Suffredin, said he’s not especially concerned about the suit, but he conceded it’s breaking new ground. “This is the first step to review the amendment and for the courts to decide what it means,” he said.

   The action could be awkward for some civic groups that supported the lockbox amendment, arguing it would give voters more willingness to support tax hikes if they were guaranteed the money would go for transportation and not be siphoned off for other uses.



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