Tax Protest Suit against McHenry County, Harrison School, CL Grade & High School, plus Alg & McH Townships

Four tax districts in McHenry County are targeted in a tax protest suit filed by attorney Timothy Dwyer on behalf of WKS CRYSTAL Lake, LLC, ET AL.

McHenry County is accused of having excessive funds on hand for the Valley Hi Nursing Home, the Road & Bridge Fund, the Matching Fund and the Loss and Prevention Fund.

Dwyer argues that fund balances must be compared to recent years’ annual expenditures.

The basic argument, as lifted from an Illinois court case is

no taxing district shall be permitted to accumulate unnecessary surplus from taxes collected but should confine their levies to the amount actually needed to be determined annually.

Two years annual spending is cited in a 1952 Illinois Supreme Court case.

In 1955, the top court ruled,

The authority to levy a tax for building purposes is intended to provide for the needs of the ensuing year and not to provide a fund for possible future needs.

In 1996, an appellate court ruled,

we conclude that a tax objector can meet its burden to show an excessive accumulation by presenting evidence that the accumulation in the fund exceeds two to three times the average annual expenditures for the fund

Valley Hi Nursing Home fund's cash on hand from FY 2006 through FY 2016 (projected).

Valley Hi Nursing Home fund’s cash on hand from FY 2006 through FY 2016 (projected).

Valley Hi’s $4.5 and $4 million levies are cited and compared with cash on hand . [There is a typo in the text, which should say $40 million.]

[Last year the levy was $3 million.  Before the County Board now is a levy for $2.25 million for Valley Hi.]

Then the suit praises the management of Valley Hi:

By virtue of efficient operation, the annual expenditures of the Valley Hi Nursing Home are virtually zero because the Nursing Home receives Medicare and Medicaid funding.

The Road & Bridge Fund of county government is also attacked.

The filing shows an annual budget of $1,050,000 with a bank balance of $3,938,591, over three times the amount spent in each of the three years before.

The Matching Fund had a balance of  $10,200,708, but there was a levy of $1,150,000.

$14,169,115 was in the Loss and Prevention Fund bank account.  Nevertheless, the County Board levied  $2,750,000.

Dwyer argues that  “the aforesaid levies untaken by Mcenry County are illegal, void and excessive as a matter of law” and ask for the County Treasurer to write rebate checks to his clients.

= = = = =
The complaint about Wonder Lake’s Harrison School District tomorrow; Crystal Lake Grade School District 47’s Sunday and Crystal Lake High School’s on Monday; and McHenry Township’s Tuesday.


Tax Protest Suit against McHenry County, Harrison School, CL Grade & High School, plus Alg & McH Townships — 19 Comments

  1. Interesting.

    it has always been stated that until people start to feel it in their pocket book they will not challenge the ineptitude and irresponsibility of government officials – both the elected and those not elected (public sector employment).

    Remember, budgets are NOT prepared by the elected officials, they are prepared by public sector employees!

    In every case, the majority of those elected to office will ‘rubber’ stamp whatever the public sector employees put forward UNLESS the taxpayers revolt!!

    One exception to the preparation of budgets being performed by people not elected to office would be the smaller townships.

  2. Now that a competent outside attorney is investigating local tax and spending practices, local officials will lose control of the narrative.

    Might be fruitful for outside attorneys to ferret out personal conflicts (which result in public policy producing private profits) of any in power to control the flow of public funds, if any such conflicts exist.


    Do we know anything about this org Cal?

    Is Bob Anderson a board members? 🙂

    I still believe if we are every going to force our gov to be fiscally responsible, we must control tax rates and levies with our 2/3 approval voting.

    Taking the power to just raise the amount we pay from the elected would be a big move in the right direction.

    Forcing balanced budgets and taking away even short term borrowing would be a plus for us also.

    The employee’s that work for us would soon understand the plan and change their game to fit the rules.

    After all, they like their jobs and want to keep them for the pensions.

  4. I hope the taxpayers win.

    Something is wrong in this county that we are being taxed so much but don’t have good public transportation and good paying jobs and other things to keep up.

    Get the greed out.

  5. Everyone understand that this will not affect individual Board members or decision-making officials, unless some specific connection can be established between a personal behavior and result?

    If no personal benefit can be proven, officials will simply bemoan the unfairness of it all and keep on doing what they have been doing.

    It is not ‘the government’s’ money that the plantiffs&attorney will collect, it is the accumulation of TAXPAYERS’ money.

    WE will all pay more in taxes to make up for the sum of money the plaintiffs will receive.

    We are getting our ‘bigger bullies’ now.

    But we will not be better off after this unless regular people start getting VERY involved in SPECIFICS of public money cash flow.

    That means digging into the numbers, demanding that board members stop speaking in general platitudes and start speaking in specific detail about each budgeted expenditure.

  6. I find the most interesting part of this story to be the following:

    “In 1955, the top court ruled the authority to levy a tax for building purposes is intended to provide for the needs of the ensuing year and not to provide a fund for possible future needs.”

    In a perfect world, governments would levy exactly the amount they need each year and have neither a surplus or a deficit.

    Since the world isn’t perfect, and governments don’t know exactly how much they’ll need, good governments run a MODEST surplus one year and then, since they have excess, incur a modest deficit the next so that, over time, revenues and expenditures are nearly equal.

    Running surpluses year after year and building up huge fund balances is just over taxing.

    These governments justify large fund balances with phony arguments, such as Valley Hi saying they “need” a full year’s reserve, “just in case”.

    That is a lie and bad public policy.

    Ditto the school districts that do the same thing.

    Let me be clear:

    a lie means it is false and they know it is false, and I am saying they are lying.

    The purpose of the fund balance is only to provide necessary liquidity, and the Supreme Court has said so.

    The fund balance should equal the greatest deficit that occurs during the year plus a modest margin.

    Moody’s Investors Service considers 8.5% to be adequate — one month’s expenditures, and remember Moody’s is watching out for creditors, not taxpayers!

    No for profit business maintains huge excess cash reserves.

    No municipal utility, such as water and sewer systems, maintain such huge excess cash reserves.

    So the arguments by such governmental units such as Valley Hi and D155 are patently false, and the courts have spoken to the issue.

    It’is time for the voters to make clear they will no longer tolerate local governments regularly taxing more than they need.

  7. Does anyone know for sure if 155 has a surplus/slush fund of more than $80 million?

    I have read it many places especially during the teachers contract negotiations.

    Can this info be FOIA?

  8. Has the time come for the County Board to replace Peter and Ralph?

  9. A problem, as I see it with the rulings from the 1950’s, is that the PTELL law now prevents a district from levying an “amount actually needed to be determined annually” and “to provide for the needs of the ensuing year and not to provide a fund for possible future needs.”

    Capital projects are non-recurring in nature and can be a fairly large amount in any one particular year.

    Projects like roof and parking lot replacements, HVAC/Security/fire/electrical upgrades, classroom upgrades/expansions are fairly expensive (even without prevailing wages).

    Under the 1950’s rulings, assuming a district had been running a perfectly balanced operating budget over several years, but now needed to spend $1 million for a roof replacement, the PTELL cap will prevent the district from levying the incremental $1 million needed for the ensuing year, how is the district supposed to come up with an extra $1 million when it can’t levy for it and its prevented from buiding up funds for “future needs”?

    As stated, the 1950’s Supreme Court rulings imply that a district can levy to meet its annual needs, but the PTELL law contradicts that opinion by putting a hard cap on the levy that would prevent a district from meeting those needs.

    It seems as though the Supreme Court positions as stated above are inconsistent with the PTELL law.

  10. jgkm6

    To find all specific fund and financial data:

    Click annual financial reports

    Click desired year

    Click school district

    Find your school. Example: Woodstock D200 is.


    Your school will have 155 in third set of numbers.

    Now you see an excel spreadsheet with tabs at the bottom.

    Each tab has different sets of data.

    Have fun.

  11. Yes, it can be obtained through a Freedom of Information Act request.

  12. Between 2012-2014, District 155 has never had less than $109,000,000, which is 19 million dollars in excess of its annual expenditures over the last three years.

    That is according to their own internal documents.

    District 47 has over 38 million dollars in investments that will not mature between fiscal year 2016-17 to 2024!

    PTELL has not invalidated Supreme Court holdings cited in the Tax Rate Objection case.

    It is still the law in Illinois that a taxing district can only levy for the needs of the ensuing fiscal year.

    PTELL is a problem, however, in terms of taxing bodies taking what is available (i.e., new construction and the CPI or 5%, whichever is less), regardless of whether the taxing body needs it or not.

    Effectively, PTELL forces the taxing body to include the percentage increase as well as the new construction or “lose it”.

    The finacial administators highly encourage the taxing bodies to take what is available.

    Sadly, those Board Members actually voting in the levy increase rarely have all the information.

    As a final matter, Bob Anderson has nothing to do with this lawsuit.

    He is a sitting Member of one of the taxing bodies (school district 36) under scrutiny.

  13. As I said during my campaign for election for County Board and on this blog more than once, the liquid account on deposit with Valley Hi from tax collections is not only immoral, but illegal.

    Rather than be proactive and devise a strategy in advance for resolving this issue which the Board was warned about by me, the Board did nothing subjecting county taxpayers to more expense in the form of lawyers’ fees to defend against their defenseless actons.

    In part, the residents are to blame for electing people who are incompetent; incapable of providing necessary oversight of County finances.

    They prefer to play team politics messaging to the public which political team is really the most “conservative” when in fact their means of levying and tax collection would make Michael Madigan blush.

    Hopefully, this lawsuit will be a wake-up call for residents to remove every member of Board for their actions or inactions regarding means of tax collections and replace them with individuals who not only desire to be proper stewards of county taxpayer but possess the necessary skill-set to do the job without the full-time benefits.

    Of course, for any one who served on the County Board between the years 2002 and 2013, you would hope they would have the decency of character to resign now knowing they have failed the people who put them in office.

    Remember “Republican” McHenry County, your number #29 did not happen by chance but was well earned.

    I will not say I told you so! But I told you so . . .

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