By THOMAS W. KELTY
JAMES M. BANOVETZ, Ph.D.
Illinois' system of home rule suffered its most severe set-back on April 12 when voters in Rockford, the state's second largest city, voted to abandon home rule. While the immediate effect of the voters' action will be an estimated $9 million reduction in the city's budget and restraints on the city's economic development program, the rejection could lead to new questions regarding the state's home rule system, judged by many to be the most liberal local government enabling provision in the nation.
From a state-wide perspective, the Rockford action appears to be an abberation. During the twelve years that home rule has been an option for cities and villages, a total of 104 municipalities have operated under the home rule provisions. Of these, 71 became home rule units automatically because their populations were over 25,000 when home rule was instituted by the adoption of the 1971 state constitution; 33 other communities have subsequently adopted home rule by referendum. Voters in only four home rule municipalities, including Rockford, have elected to abandon home rule. Thus, 100 Illinois cities and villages currently operate with home rule authority.
Voters in Illinois cities and villages have historically shown a strong preference for local home rule. Home rule has been the subject of 88 different municipal referenda since 1971. It was approved by local voters in 60 percent of these elections. In the aggregate, 69.7 percent of the nearly 450,000 voters participating in these elections voted in favor of local home rule authority.
Home Rule as an Issue
Home rule was designed as a system to give locally elected officials more discretion to deal with the problems of their community, and to free local governments from reliance upon, and control by, the state's General Assembly. Without home rule, municipalities have been permitted to exercise only those powers given to them by the General Assembly; with home rule, local boards and councils may exercise any power of local government which is not prohibited to them by the constitution or the General Assembly.
The principal objection of home rule opponents has focused on the tax and borrowing authority of home rule units. Home rule cities and villages are not subject to statutory restrictions on their authority to levy property taxes or to incur bonded indebtedness, and they may levy any taxes except for taxes based on income, earnings, or occupations. Rockford's home rule opponents based their campaign on concerns over high taxes and demands for more voter control. They argued in favor of statutory restrictions on local taxing powders, asserting that voters should have the opportunity, through referenda, to approve or reject new taxes or tax increases.
The Use of Home Rule
Home rule authority, however, extends beyond taxing powers. Preliminary reports of research now in process regarding Illinois' use of home rule suggest that: (1) most uses of home rule have not involved tax authority; (2) in the aggregate, Illinois cities and villages have made wide use of home rule to attack a broad range of local problems, but (3) few municipalities have made extensive use of home rule powers.
A number of new taxes have been levied with the use of home rule power, including the hotel/motel tax, amusement tax, wheel tax, Chicago's so-called "head" tax on the number of employees hired by local businesses, and taxes on the sale of liquor, restaurant meals, and new car sales. Few municipalities have levied any new taxes with home rule authority; fewer still levy more than one or two. Even fewer municipalities appear to have used home rule powers to levy property taxes in excess of non-home rule statutory limitations. On the other hand, Lincolnshire has used home rule to provide property tax relief for senior citizens.
Home rule authority has been more commonly used to facilitate the sale of local bonds and to reduce the over-all cost of debt to local taxpayers. The success of home rule units with industrial revenue bonds led the
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May 1983 / Illinois Municipal Review / Page 11
Illinois General Assembly to extend IR bond authority to non-home rule units as well. Villa Park was so successful in using home rule authority to reduce its debt service costs that, when its voters elected to abandon home rule, an increase in property taxes was required to pay the higher interest rates.
Home rule borrowing authority has been used primarily to promote local industrial development efforts. This home rule use was instrumental in bringing $360 million in new private investment into downtown Peoria and in producing 300 new industrial jobs in Rock Island. Home rule borrowing has also been used to reduce hospitalization costs for Decatur residents and to make home mortgage money available at lower interest rates to residents of Danville, Decatur, Evergreen Park, and Rock Island.
Home rule is most frequently used, however, in areas unrelated to finance. Home rule authority has been used locally to regulate cable TV, video games, day care centers, massage parlors, nude dancing, and condominiums. It has been used to attack local environmental problems, juvenile delinquency, drug abuse, and landlord/tenant problems. Home rule has been used to strengthen local zoning and subdivision regulations, to improve police and fire services, to promote racial integration, and to increase opportunities for citizen participation in local government. Finally, it has been used to alter the structure of local government and to modify local government rules and procedures.
The Mis-Use of Home Rule
The alleged mis-use of home rule authority in Illinois is much more difficult to identify. There are no documented instances of confiscatory taxation, municipal bankruptcies, or other obvious abuses attributed to home rule in Illinois. Evidence of abuse, then, is best sought by examining the application of the three constitutional checks — legislative, judicial, and electoral — upon the exercise of local home rule powers.
The first is a check by the General Assembly which can act either to deny home rule units any particular power or claim exclusive state jurisdiction in the use of any power. The General Assembly has not found cause to act to restrict abusive uses of local home rule power. It has, on a number of occasions, acted to preempt home rule powers to prevent future possibilities of abuse (real or imagined). During the last eight years, the General Assembly has acted only twice to restrict the way home rule powers were being used: it acted to establish a uniform age throughout the state for the sale of alcoholic beverages and it limited home rule authority over police and fire pension programs.
A second check on the alleged mis-use of home rule powers is provided by the Illinois courts. The courts can rule particular uses of home rule powers illegal. They have acted in several instances to do so, most recently in denying Chicago the authority to levy a service tax and in over-ruling the use of home rule power to levy a tax of more than 5 percent on utility sales. In the vast majority of cases reaching the state's Supreme Court, however, the Court has upheld the legality of the use of home rule authority.
The third check on the alleged abuse of home rule authority is that exercised by the voters. This can happen in two ways: voters can refuse to re-elect officials who abuse their authority or they can, in a referendum, abandon the use of home rule in their community. There have been 24 home rule abandonment referenda in Illinois history, the most recent being the Rockford election. In 20 of these elections, or 83 percent, the voters have chosen to retain home rule.
Rockford's home rule opponents did not claim that home rule powers had been abused by the city. Rather, they argued that the potential for abuse was present, and they advocated the defeat of home rule so that voters could act, directly, through referenda, on all proposals for tax increases.
In two other cases of abandonment, Lombard and Villa Park, tax abuse was charged. In each case, the initiative for the abandonment referendum came from a Chicago-based taxpayers group, the National Taxpayers United of Illinois. The group sought abandonment referenda in at least 13 different suburban communities in 1980; it succeeded in only these two cases. In neither community were the disputed tax actions based on the exercise of home rule powers; in Villa Park, the home rule abandonment forced an increase in tax rates.
Tax abuse was not an issue in the fourth abandonment, Lisle. In this instance, the home rule opposition was provoked by the village board's refusal to abide by the outcome of an advisory referendum regarding the construction of a new village hall.
Illinois' twelve years of experience with home rule has provided a record which shows that:
• 104 municipalities have had home rule powers; 100 continue to have such powers.
• home rule has been used as a source of local taxing authority, but it has been used much more frequently to promote economic development and to attack a wide range of community problems.
• there are fewer than a dozen possible instances in which local communities may have mis-used home rule authority.
• there is substantial local voter support for home rule as evidenced by the fact that nearly 70 percent of all voters who have participated in municipal home rule referenda in the last twelve years have voted in favor of the adoption or retention of home rule.
Page 14 / Illinois Municipal Review / May 1983
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