Tillman v. Pritzker

2021 IL 126387

183 N.E.3d 94

451 Ill.Dec. 48

John TILLMAN, Appellee,

v.J.B. PRITZKER, in His Official Capacity as of Governor of the State of Illinois, et al., Appellants.

Docket No. 126387

Supreme Court of Illinois.

Opinion filed May 20, 2021.

Kwame Raoul, Attorney General, of Springfield (Jane Elinor Notz, Solicitor General, and Richard S. Huszagh, Assistant Attorney General, of Chicago, of counsel), for appellants.

John E. Theis, Daniel R. Theis, and Michael J. Brusatte, of Webber & Theis, P.C., of Urbana, and Raoul G. Cantero, of White & Case LLP, of Miami, Florida, for appellee.

CHIEF JUSTICE ANNE M. BURKE delivered the judgment of the court, with opinion.

¶ 1 Petitioner John Tillman filed a petition for leave to file a taxpayer action under section 11-303 of the Code of Civil Procedure (Code) ( 735 ILCS 5/11-303 (West 2018) ) in the circuit court of Sangamon County. In his attached complaint, petitioner alleged that certain general obligation bonds issued by the State of Illinois in 2003 and 2017 were unconstitutional. The circuit court denied the petition to file the proposed complaint, finding that there was no reasonable ground for the filing of such action. The appellate court reversed the circuit court's judgment and remanded for further proceedings. 2020 IL App (4th) 190611, 443 Ill.Dec. 833, 162 N.E.3d 467. For the following reasons, we reverse the judgment of the appellate court and affirm the judgment of the circuit court.

¶ 2 BACKGROUND

¶ 3 On July 1, 2019, petitioner filed a petition in the circuit court pursuant to section 11-303 of the Code seeking leave to file a taxpayer complaint to restrain and enjoin the disbursement of public funds by respondents, Governor J.B. Pritzker, Treasurer Michael W. Frerichs, and Comptroller Susana A. Mendoza. Section 11-303 sets forth the following requirements for a taxpayer action filed by a private citizen:

" § 11-303. Action by private citizen. Such action, when prosecuted by a citizen and taxpayer of the State, shall be commenced by petition for leave to file an action to restrain and enjoin the defendant or defendants from disbursing the public funds of the State. Such petition shall have attached thereto a copy of the complaint, leave to file which is petitioned for. Upon the filing of such petition, it shall be presented to the court, and the court shall enter an order stating the date of the presentation of the petition and fixing a day, which shall not be less than 5 nor more than 10 days thereafter, when such petition for leave to file the action will be heard. The court shall also order the petitioner to give notice in writing to each defendant named therein and to the Attorney General, specifying in such notice the fact of the presentation of such petition and the date and time when the same will be heard. Such notice shall be served upon the defendants and upon the Attorney General, as the case may be, at least 5 days before the hearing of such petition.

Upon such hearing, if the court is satisfied that there is reasonable ground for the filing of such action, the court may grant the petition and order the complaint to be filed and process to issue. The court may, in its discretion, grant leave to file the complaint as to certain items, parts or portions of any appropriation Act sought to be enjoined and mentioned in such complaint, and may deny leave as to the rest." (Emphasis added.) 735 ILCS 5/11-303 (West 2018).

¶ 4 In the proposed complaint attached to his petition, petitioner alleged, in relevant part, that certain general obligation bonds issued by the State in 2003 and 2017 violated article IX, section 9(b), of the Illinois Constitution of 1970 on the ground that they were not issued for qualifying "specific purposes." Petitioner alleged that "specific purposes," within the meaning of this constitutional provision, refers exclusively to "specific projects in the nature of capital improvements, such as roads, buildings, and bridges."

¶ 5 Article IX, section 9(b), of the Illinois Constitution provides:

"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." Ill. Const. 1970, art. IX, § 9 (b).

¶ 6 The 2003 bonds challenged by petitioner were issued pursuant to a statute enacted into law on April 7, 2003, after being passed by the vote of at least three-fifths of the members elected to each house of the General Assembly. 30 ILCS 330/7.2 (West 2018) (added by Pub. Act 93-2, § 10 (eff. Apr. 7, 2003)). Titled "State pension funding," the law authorized $10 billion in bonds to be issued "for the purpose of making contributions to the designated retirement systems," which the statute defined as the State Employees’ Retirement System of Illinois, the Teachers’ Retirement System of the State of Illinois, the State Universities Retirement System, the Judges Retirement System of Illinois, and the General Assembly Retirement System. Id. The statute created the Pension Contribution Fund as a special fund in the state treasury. Id. § 7.2(b). It further directed that all proceeds from the bond sale order, less the amounts authorized to be deposited directly into the capitalized interest account of the General Obligation Bond Retirement and Interest Fund or otherwise directly paid out for bond sale expenses, be deposited into the Pension Contribution Fund. Id. The law also outlined requirements for depositing the bond proceeds, including the fund into which the proceeds were to be deposited and the persons responsible for making the deposits and allocations to the designated retirement systems. Id. § 7.2(c), (d). According to petitioner's complaint, the bond sale order was executed on June 5, 2003, and the entire $10 billion in general obligation bonds were issued on June 12, 2003, with maturity dates ranging from 2008 to 2033.

¶ 7 The 2017 bonds challenged by petitioner were issued pursuant to a statute enacted into law on July 6, 2017, after being passed by the vote of at least three-fifths of the members elected to each house of the General Assembly. Id. § 7.6 (added by Pub. Act 100-23, § 75-10 (eff. July 6, 2017)). Titled "Income Tax Proceed Bonds," the statute authorized $6 billion in bonds to be issued "for the purpose of paying vouchers incurred by the State prior to July 1, 2017." Id. § 7.6(b). The law created the Income Tax Bond Fund as a special fund in the state treasury and directed that all proceeds from the bond sale order, less the authorized amounts for bond sale expenses, be deposited into that fund. Id. § 7.6(c). The statute further directed that "[a]ll moneys in the Income Tax Bond Fund shall be used for the purpose of paying vouchers incurred by the State prior to July 1, 2017." Id. According to petitioner's complaint, the bond sale order was executed on October 6, 2017, and the entire $6 billion in general obligation bonds were issued on November 8, 2017, with maturity dates ranging from 2018 to 2028.

¶ 8 Petitioner alleged that the 2003 bonds failed to comply with the "specific purposes" requirement in the Illinois Constitution, for two reasons. First, petitioner alleged that the State used part of the bond proceeds to reimburse the general revenue fund for a portion of the State's required contributions to its retirement systems for fiscal years 2003 and 2004. The complaint characterized these actions as "deficit financing." Petitioner alleged that the remainder of the 2003 bond proceeds were used to reduce the State's annual pension contributions by the amount of the debt service on the bonds. The complaint characterized this transaction as a "loan" to the pension systems that amounted to "financial speculation." Petitioner alleged that neither of these purposes is authorized by the Illinois Constitution as a "specific purpose" for long-term debt incurred by the State. With respect to the 2017 bonds, petitioner alleged that the proceeds from these bonds were used to pay the State's backlog of unpaid bills incurred as a result of the 2016-17 budget impasse. He alleged that the State's issuance of bonds for this purpose did not qualify as a "specific purpose" authorized by the Illinois Constitution.

¶ 9 According to the complaint, approximately $14.35 billion of the 2003 and 2017 bonds remained outstanding as of the date petitioner filed his petition. Petitioner alleged that "the burden of servicing this unconstitutional debt falls on the taxpayers of Illinois," a group that includes petitioner. In his prayer for relief, he requested (1) a judicial declaration that the 2003 and 2017 bond debts were unconstitutional and unenforceable and (2) an injunction prohibiting respondents from making any further disbursements of public funds in service of the unconstitutional debts.

¶ 10 Respondents filed a written objection to the petition. They argued that petitioner failed to establish reasonable grounds for filing his taxpayer complaint because his constitutional claims were invalid on the face of the complaint. Alternatively, respondents contended petitioner's complaint was barred by laches because he waited to file his action until years after the authorizing statutes were enacted and the bonds issued and, by that time, the State had already made substantial payments on the bonds. Respondents also argued that petitioner's claims with respect to the 2003 bonds were barred by the statute of limitations and that the complaint failed to join bondholders as necessary parties to the action.

¶ 11 On August 29, 2019, the circuit court denied petitioner's section 11-303 petition. In a memorandum order, the court held that the...