Here’s a memo to Mike Walkup, Joe Gottemoller and Peter Austin addressing the proposal of Walkup to transfer $37 million from the Valley Hi Fund to the General Fund in order to cut county government’s tax take by 50% for one year:
TO: Joseph Gottemoller, County Board Chairman
Michael J. Walkup, County Board
Peter B. Austin, County Administrator
FROM: Brandy S. Quance, Assistant State’s Attorney
DATE: February 24, 2016
RE: Transfer of Amounts Accumulated through the Valley Hi Tax Levy
Mr. Walkup has asked our office to determine if it is legal to transfer funds from the Valley Hi fund to McHenry County’s general fund.
The money collected as a result of the Valley Hi tax levy was for the construction, operation, and maintenance of Valley Hi.
Because the tax levy was for a specific purpose, the funds collected must be used for that purpose and cannot be transferred to the general The Counties Code provides a county board with additional powers in counties which establish and maintain county nursing homes. See 55 ILCS 5/5-21001.
Section 5-21001(8) of the Counties Code provides the County Board with the power to levy a tax for the construction, operation, and maintenance of Valley Hi.
Section 5-21001(8) states the County Board shall have the power:
To make appropriations from the county treasury for the purchase of land and the erection of buildings for the home, and to defray the expenses necessary for the care and maintenance of the home and for providing maintenance, personal care and nursing services to the patients therein, and to cause an amount sufficient for those purposes to be levied upon the taxable property of the counties and collected as other taxes and further providing that in counties with a population of not more than 1,000,000 to levy and collect annually a tax of not to exceed .1% of the value, as equalized or assessed by the Department of Revenue, of all the taxable property in the county for these purposes.The tax shall be in addition to all other taxes which the county is authorized to levy on the aggregate valuation of the property within the county and shall not be included in any limitation of the tax rate upon which taxes are required to be extended, but shall be excluded therefrom and in addition thereto.
The tax shall be levied and collected in like manner as the general taxes of the county, and when collected, shall be paid into a special fund in the county treasury and used only as herein authorized.
No such tax shall be levied or increased from a rate lower than the maximum rate in any such county until the question of levying such tax has first been submitted to the voters of such county at an election held in such county, and has been approved by a majority of such voters voting thereon.
The corporate authorities shall certify the question of levying such tax to the proper election officials, who shall submit the question to the voters at an election held in accordance with the general election law. [Emphasis added.] Id.
This section states the specific purpose for which the tax may be levied.
Taxes levied for a specific purpose must be applied to the purpose for which they were levied. See People ex rel. Pollock v. Chicago, Terre Haute and Southeastern Ry. Co., 315 Ill. 589, 591 (1925) and McFarland v. Town of Bourbonnais, 339 Ill. App. 328, 334 (1950).
A county board does not have the authority to cause funds to be transferred to another fund. People ex rel. Clark v. Baltimore & O.S.W. Ry. Co., 353 Ill. 492 (1933).
In the case of People ex rel. Clark v. Baltimore & O.S.W. Ry. Co., the county board diverted funds from the county highway fund to the general fund. Id. at 494.
The statute relating to state highways allowed for a county highway tax to be levied and provided that the money from the tax be placed in a separate fund to be used for highway purposes. Id. at 495. The court stated “[t]he county board had no right or authority to cause funds to be transferred from the county highway fund to the general county fund or to any other fund, and its orders for such diversions were illegal.” Id.
The money collected as a result of the Valley Hi tax levy must be used for the construction, operation, and maintenance of Valley Hi and may not be transferred to the general fund. If you have any questions regarding this matter, please feel free to contact me at extension 4075.