Title: Illinois State Chamber of Commerce v. Filan

State: illinois

Issuer: Illinois Supreme Court

Document:

Docket No. 100197-Agenda 25-May 2005.
THE ILLINOIS STATE CHAMBER OF COMMERCE, 
Appellee, v. 
JOHN FILAN, in his Capacity as Director of the Governor's Office 
of Management and Budget, et al., Appellants.
Opinion filed October 6, 2005.
JUSTICE GARMAN delivered the opinion of the court:
This case concerns the constitutionality of a portion of 
Public Act 93-32, known as the FY2004 Budget Implementation (State 
Finance-Revenues) Act (Budget Act) (Pub. Act 93-32, eff. in relevant part on 
June 20, 2003). The circuit court of Cook County granted partial summary 
judgment to plaintiff, the Illinois State Chamber of Commerce (Chamber), finding 
the Budget Act unconstitutional as applied to the Chamber, based on violations 
of the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art. 
IX, §2) and the due process clause of the Illinois Constitution (Ill. Const. 
1970, art. I, §2). The circuit court entered a finding under Supreme Court Rule 
304(a) (155 Ill. 2d R. 304(a)), and defendants appealed to this court.

BACKGROUND
In 2003, the State of Illinois was in the midst of a 
budget crisis, facing a deficit of nearly $5 billion for fiscal year 2004 
(FY2004). Effective in relevant part June 20, 2003, the General Assembly enacted 
Public Act 93-32, implementing the state's budget for FY2004. In submitting a 
proposed budget for FY2004, the Governor explained in his budget summary (Budget 
Summary) the steps proposed to address the state's fiscal emergency. Two of 
those steps are relevant to this case and were included in the Budget Act. 
First, the Budget Act both established new fees and increased others. The Budget 
Summary referred to these fees as "Non-Consumer User Fees." The stated purpose 
of the new and increased fees was to bring "user fees for state regulatory 
services and licenses in line with other states in order to recover actual 
program costs, generating over $300 million in new revenue to the state in 
fiscal year 2004." Illinois State Budget, Fiscal Year 2004, at 1-10. 
Approximately 300 fees were to be affected by this provision. Secondly, a 
mechanism used by the Budget Act called "Administrative Cost Allocations" 
provided for the transfer of monies in certain funds to the General Revenue Fund 
(GRF). The Budget Summary explained this mechanism as follows:
"In order to ensure that each fund is paying its 'fair 
share' for administrative services and oversight provided with general funds, 
this budget creates a charge based on the level of revenue and activity of each 
fund. Many funds require a full array of state services, including accounting, 
investing, auditing, leasing and legal representation. Many of these services 
are supported through the General Revenue Fund. A $330 million charge for 
services will be assessed on funds. To partially pay for prior administrative 
cost subsidies, $144 million in fund balances will be transferred from select 
funds to the General Revenue Fund in fiscal year 2003. The total revenue 
generated from administrative cost allocations is $474 million." Illinois State 
Budget, Fiscal Year 2004, at 1-10.
Transfers from these funds to the GRF were authorized by 
three new provisions added to the State Finance Act by Public Act 93-32. Section 
8.42 (30 ILCS 105/8.42 (West 2004)) authorized transfers of specified amounts 
from certain listed funds to the GRF, known as "interfund transfers." The 
parties also refer to these transfers as "fund sweeps." Section 8h (30 ILCS 
105/8h (West 2004)) authorizes the Director of the Bureau of the Budget (now 
known as Office of Management and Budget (OMB) (20 ILCS 3005/9.5 (West 2004)) to 
direct the State Treasurer and Comptroller to transfer specified sums, to be 
determined by the Director as set forth in that section, from any fund held by 
the State Treasurer to the GRF. Section 8j (30 ILCS 105/8j (West 2004)) targeted 
the new and increased Non-Consumer User Fees and provides:
"Notwithstanding any other law to the contrary, additional 
amounts generated by the new and increased fees created or authorized by this 
amendatory Act of the 93rd General Assembly and by Senate Bill 774, Senate Bill 
841, and Senate Bill 842 of the 93rd General Assembly, if those bills become 
law, shall be allocated between the fund otherwise entitled to receive the fee 
and the General Revenue Fund by the Bureau of the Budget. In determining the 
amount of the allocation to the General Revenue Fund, the Director of the Bureau 
of the Budget shall calculate whether the available resources in the fund are 
sufficient to satisfy the unexpended and unreserved appropriations from the fund 
for the fiscal year.
In calculating the available resources in a fund, the 
Director of the Bureau of the Budget may include receipts, transfers into the 
fund, and other resources anticipated to be available in the fund in that fiscal 
year.
Upon determining the amount of an allocation to the 
General Revenue Fund under this Section, the Director of the Bureau of the 
Budget may direct the State Treasurer and Comptroller to transfer the amount of 
that allocation from the fund in which the fee amounts have been deposited to 
the General Revenue Fund; provided, however, that the Director shall not direct 
the transfer of any amount that would have the effect of reducing the available 
resources in the fund to an amount less than the amount remaining unexpended and 
unreserved from the total appropriation from that fund for that fiscal year.
The State Treasurer and Comptroller shall transfer the 
amounts designated under this Section as soon as may be practicable after 
receiving the direction to transfer from the Director of the Bureau of the 
Budget." 30 ILCS 105/8j (West 2004).
Relevant to the instant case, the Illinois Workers' 
Compensation Commission Operations Fund (formerly known as the Industrial 
Commission Operations Fund (820 ILCS 305/13 (West 2004)) (Operations Fund) is a 
special fund created in the State Treasury (820 ILCS 305/4(a-1) (West 2004)). 
Subject to appropriation, all money in the fund is to be used solely for 
operations of the Commission. 820 ILCS 305/4(a-1) (West 2004). The Chamber 
employs approximately 25 persons in Illinois and maintains a workers' 
compensation insurance policy. The Budget Act created two separate fees to be 
paid by employers into the Operations Fund. One was the Industrial Commission 
Operations Fund surcharge (now known as the Illinois Workers' Compensation 
Commission Operations Fund surcharge (820 ILCS 305/13 (West 2004)) (surcharge) 
and the other was the Industrial Commission Operations Fund fee (now known as 
the Illinois Workers' Compensation Commission Operations Fund fee (820 ILCS 
305/13 (West 2004)) (Fund fee). The Budget Act amended the Illinois Insurance 
Code by adding new section 416 (215 ILCS 5/416 (West 2004)). That section 
required insurance companies that insure employers' liabilities under the 
Workers' Compensation Act (820 ILCS 305/1 et seq. (West 2004)) or the 
Workers' Occupational Diseases Act (820 ILCS 310/1 et seq. (West 2004)) 
to remit a surcharge based on the annual direct written premium of the insurance 
company to be deposited in the Operations Fund. The rate was set at 1.5% of 
direct written premium and was to be collected from employers by their insurance 
companies as a separately stated surcharge. Pub. Act 93-32, eff. in relevant 
part June 20, 2003 (adding 215 ILCS 5/416(b)(1), (b)(2)). In 2004, the Chamber 
paid a surcharge of $148. The Fund fee was established by adding new section 4d 
to the Workers' Compensation Act. Pub. Act 93-32, eff. in relevant part June 20, 
2003 (adding 820 ILCS 305/4d). This fee was to be charged to self-insured 
employers at a rate equal to 0.045% of annual actual wages paid in Illinois. 
That fee is also deposited in the Operations Fund. Pub. Act 93-32, eff. in 
relevant part June 20, 2003 (adding 820 ILCS 305/4d(b)). The General Assembly 
budgeted $13.7 million to operate the Commission in FY2004. The surcharge and 
the Fund fee were expected to generate approximately $30 million. Fiscal Year 
2003 Comptroller's Fee Imposition Report, at 5.
In April 2004, the Chamber filed a two-count complaint 
asking for a declaratory judgment and for injunctive relief. Count I alleged 
that the surcharge was intentionally set at a level in excess of the cost of 
operating the Commission and that the Chamber's obligation to pay the surcharge 
made it a Non-Consumer User Fee payer. Those fee payers not targeted by the 
Budget Act for fee increases were referred to by the complaint as "Non-Burdened 
Fee Payers." The complaint further alleged that there is no real and substantial 
difference between the Chamber and the Non-Burdened Fee Payers because they all 
engage in activities that require the state to impose regulation or provide a 
service. According to the complaint, the Budget Act violates the uniformity 
clause because it singles out persons, including the Chamber, to pay a charge 
deliberately designed to generate revenues in excess of the amounts needed to 
operate the Commission and provides for the transfer of excess revenue to the 
GRF. Count I prayed for (1) a declaratory judgment that the Budget Act violates 
the uniformity clause; (2) an injunction barring defendants from requiring 
insurers to charge or employers to pay the surcharge; (3) an injunction barring 
the transfer of funds from the Operations Fund to the GRF; and (4) a mandatory 
injunction requiring all money transferred to the GRF to be returned to the 
Operations Fund.
Count II alleged that excess amounts of the increased 
fees, including the surcharge, were intended to be deposited into the GRF and 
constitute taxes. The complaint alleged that there is no rational relationship 
between the causes of the budget imbalance and the group of persons, including 
the Chamber, who are obliged to contribute to the cost of operating the 
Commission. It was further alleged that, to the extent that it deliberately 
raises funds in excess of amounts needed to fund the operations of the 
Commission, the surcharge is an arbitrary use of the state's taxing power and 
violates the due process clauses of the United States and Illinois 
Constitutions. The relief prayed for in count II was the same as that requested 
in count I.
In a supplemental complaint filed at a later date, the 
Chamber added count III, alleging that the amount of the surcharge in excess of 
the amount needed to fund the Commission was a forced contribution of private 
property for public use, in violation of the takings clauses of the United 
States Constitution (U.S. Const., amend. V) and of the Illinois Constitution 
(Ill. Const. 1970, art. I, §15).
Defendants filed motions to dismiss (735 ILCS 5/2-615 
(West 2004)) both the original and supplemental complaints. The Chamber filed a 
motion for summary judgment. 735 ILCS 5/2-1005 (West 2004). Following arguments 
of counsel, the circuit court denied defendants' motion to dismiss and granted 
the Chamber's motion for summary judgment as to counts I and II of its 
complaint. The court held unconstitutional section 50-50 of the Budget Act (Pub. 
Act 93-32, §50-50 (adding 215 ILCS 5/416)), which created the surcharge. The 
court ordered the State Treasurer to deposit all monies currently held or 
thereafter received pursuant to the surcharge in a separate escrow account and 
to allow no disbursements therefrom pending further order of the circuit court. 
The court also enjoined the Director from reallocating funds collected by means 
of the surcharge pursuant to the authority contained in new section 8j of the 
State Finance Act. Subsequently, the circuit court denied defendants' motion to 
stay the judgment pending appeal and modified its injunctive order to allow the 
Commission to use other funds in the Operations Fund not derived from the 
surcharge.
The court entered a finding under Rule 304(a) as to the 
grant of summary judgment on uniformity and due process grounds and this appeal 
followed.

ANALYSIS
I. Standard of Review
Summary judgment is proper if, when viewed in the light 
most favorable to the nonmoving party, the pleadings, depositions, admissions, 
and affidavits on file demonstrate that there is no genuine issue as to any 
material fact and that the moving party is entitled to judgment as a matter of 
law. 735 ILCS 5/2-1005(c) (West 2004). We review the circuit court's grant of 
summary judgment de novo. Home Insurance Co. v. Cincinnati 
Insurance Co., 213 Ill. 2d 307, 315 (2004).
The constitutionality of a statute is a question of law 
and is, thus, reviewed de novo. Miller v. Rosenberg, 196 Ill. 2d 50, 57 (2001). In general, statutes carry a strong presumption of 
constitutionality (People ex rel. Ryan v. World Church of the Creator, 
198 Ill. 2d 115, 120 (2001)), and the party challenging the statute has the 
burden of rebutting that presumption (Russell v. Department of Natural 
Resources, 183 Ill. 2d 434, 441 (1998)). In addition, this court has a duty 
to uphold the constitutionality of a statute when reasonably possible. City 
of Chicago v. Morales, 177 Ill. 2d 440, 448 (1997).

II. Uniformity Clause
The Chamber argues that the surcharge imposed by the 
Budget Act violates the uniformity clause of the Illinois Constitution, which 
provides:
"In any law classifying the subjects or objects of 
nonproperty taxes or fees, the classes shall be reasonable and the subjects and 
objects within each class shall be taxed uniformly. Exemptions, deductions, 
credits, refunds and other allowances shall be reasonable." Ill. Const. 1970, 
art. IX, §2.
The principles applied to uniformity analysis are well 
known. As we have stated:
"To survive scrutiny under the uniformity clause, a 
nonproperty tax classification must (1) be based on a real and substantial 
difference between the people taxed and those not taxed, and (2) bear some 
reasonable relationship to the object of the legislation or to public policy. 
[Citation.] The uniformity clause was intended to be a broader limitation on 
legislative power to classify for nonproperty tax purposes than the limitation 
of the equal protection clause [citation] and was meant to insure that taxpayers 
would receive added protection in the state constitution based upon a standard 
of reasonableness that is more rigorous than that contained in the federal 
constitution [citation]. The party attacking a tax classification is not 
required to negate every conceivable basis that might support it. [Citation.] 
When faced with a good-faith uniformity challenge, the taxing body bears the 
initial burden of producing a justification for the classification. The 
challenging party then has the burden of persuading the court that the taxing 
body's explanation is insufficient as a matter of law or unsupported by the 
facts. [Citations.] Despite the more stringent standard under the uniformity 
clause, the scope of a court's inquiry is 'relatively narrow.' [Citation.] '[I]n 
a uniformity clause challenge the court is not required to have proof of perfect 
rationality as to each and every taxpayer. The uniformity clause was not 
designed as a straitjacket for the General Assembly. Rather, the uniformity 
clause was designed to enforce minimum standards of reasonableness and fairness 
as between groups of taxpayers.' [Citation.]" Arangold Corp. v. Zehnder, 
204 Ill. 2d 142, 153 (2003).

A. Classification Established by the Budget 
Act
The first step in our analysis is to identify the 
classification established by the Budget Act. Ordinarily, this would not be a 
difficult task. However, the parties disagree as to the relevant classification. 
The Chamber argues that the Budget Act itself establishes the classification,
i.e., all Illinois fee payers. The Chamber points out that the transfer 
authority given to the Director of the OMB under section 8(j) is limited to 
those who must pay the Non-Consumer User Fees. Thus, according to the Chamber, 
the class established under the Budget Act consists of (1) those Non-Consumer 
User Fee payers who must pay the higher fees and whose fees may be transferred 
to the GRF to help alleviate the state's budget crisis and (2) those fee payers 
not subject to the higher fees and the Director's transfer authority. Defendants 
argue that the classification consists of all those persons and entities that 
may utilize the services of the Commission. The Budget Act divides that class 
into two subgroups: (1) employers who are required to provide workers' 
compensation benefits and (2) individual employees who may bring cases before 
the Industrial Commission and who are not required to provide such benefits.
Initially, we note that the Chamber contends defendants 
have waived their argument on the appropriate classification to use in this 
case. According to the Chamber, defendants argued to the circuit court that the 
proper classification is the universe of fee payers and that the Budget Act 
distinguishes between "consumer" and "non-consumer" fee payers. The Chamber 
argues that defendants' employer/employee classification is raised for the first 
time in this appeal. Counsel for defendants stated at oral argument in this case 
that the issue of the relevant classification was discussed in terms of both 
Consumer User Fee Payers/Non-Consumer User Fee Payers and employers/employees. 
The record reveals that in opposition to the Chamber's motion for summary 
judgment, defendants alleged that the Budget Act divided the fee-paying universe 
roughly into "consumer" and "non-consumer" fee payers. Defendants noted, 
however, that this was not the only reasonable classification. Thus, defendants 
argued before the circuit court that the Budget Act raised fees on those fee 
payers who operate businesses in the state, but not, generally speaking, on 
individual consumers.
The circuit court accepted the Chamber's view of the 
relevant classification and found that the classification violated the 
uniformity clause. However, with regard to the question of whether there was a 
reasonable relationship between the classification and the object of the Budget 
Act, the court focused solely on the surcharge. We note that the rule of waiver 
is an admonition to the parties and not a limitation on the jurisdiction of this 
court. In re W.C., 167 Ill. 2d 307, 323 (1995). A reviewing court may, 
in furtherance of its responsibility to provide a just result and to maintain a 
sound and uniform body of precedent, override considerations of waiver that stem 
from the adversarial nature of our system. Dillon v. Evanston Hospital, 
199 Ill. 2d 483, 504-05 (2002). We believe it appropriate to address the 
parties' arguments on the merits; accordingly, we decline to find waiver.
As noted, the Chamber argues that the relevant 
classification is that of all Illinois fee payers. It further argues that there 
is no real and substantial difference between those who pay the 300 fees 
affected by the Budget Act and the other approximately 1,200 fees that are not 
subject to the Director's transfer authority: they all pay fees for some service 
or regulation provided. According to the Chamber, prior to enactment of the 
Budget Act, the state treated all fee payers uniformly, imposing fees limited to 
the cost of providing the service or regulation. The Chamber argues that the fee 
payers targeted by the Budget Act have no relevant characteristics that 
distinguish them from the other fee payers and that the distinction drawn by the 
Budget Act between the two groups of fee payers has no relationship to the 
purpose of the Budget Act to raise general revenues to balance the state's 
budget.
The Chamber's argument regarding the appropriate 
classification is not an unreasonable one. As a member of the group of 300 fee 
payers targeted by the Budget Act, the Chamber argues that it should not be 
required to pay fees that exceed the cost of the service provided, in contrast 
to those fee payers not included in that group. However, after identifying the 
classification and arguing that there is no real and substantial difference 
between the group of 300 fee payers subject to the Budget Act and the larger 
group of fee payers, the Chamber's uniformity analysis undergoes a 
transformation. The Chamber shifts its focus to an analysis of whether the 
surcharge bears a reasonable relationship to the purposes of the Budget Act. 
This change in focus is problematic for the Chamber. Having identified the broad 
classification of all fee payers, the Chamber must then apply the uniformity 
analysis to that broad classification. By not doing so, the Chamber implicitly 
recognizes that, as an employer subject to the surcharge, it has a direct 
interest in its validity and that a classification of all fee payers relates 
only indirectly to the surcharge. Defendants argue that the classification of 
all those who may utilize the services of the Commission is the proper focus for 
our review, and we agree. It is the Chamber's status as an employer, not as one 
of 300 fee payers, that is most relevant to the issues raised by the Chamber. 
Accordingly, we conclude that the appropriate classification is that of all 
those who may utilize the services of the Commission. This classification 
includes both employers and employees.
The Budget Act chose to impose the surcharge on employers 
who, like the Chamber, purchase and maintain insurance policies to insure their 
liability under the Workers' Compensation Act. No fees were imposed on 
employees. We note that the Chamber does not argue that the imposition of the 
surcharge itself was improper, nor does it argue that a similar type of fee 
should have been imposed on employees. At oral argument, the Chamber's counsel 
explicitly stated that the Chamber does not take issue with paying some amount 
to fund the Commission. Its complaint is with the amount of the 
surcharge.

B. Is There a Real and Substantial 
Difference Between Employers and Employees?
Defendants have the burden of producing a justification 
for the classification. Once that justification has been articulated, it is the 
Chamber's burden to produce evidence that the asserted justification is 
unsupported by the facts or is insufficient as a matter of law. As we explained 
in Arangold, 204 Ill. 2d at 156-57:
"[T]he taxing body need only assert a justification for 
the classification. It is the plaintiff who then has the evidentiary burden of 
proving that the asserted justification is unsupported by the facts. The more 
rigorous standard of reasonableness in uniformity analysis simply allows the 
plaintiff to mount a good-faith uniformity challenge without having the initial 
burden of disproving every conceivable explanation for the tax. The ultimate 
burden remains with the plaintiff, however, to demonstrate that the taxing 
body's asserted justification is unsupported by the facts or insufficient as a 
matter of law. To hold otherwise would undermine the well-settled principle that 
a statute bears a strong presumption of constitutionality and that the party 
challenging the statute has the burden of demonstrating the statute's 
unconstitutionality."
Defendants' asserted justification for the disparate 
treatment of employers and employees as to the surcharge is twofold. First, 
defendants note that distinguishing between individuals and organizations is 
common in the field of taxation and that such classifications as "individuals," 
"partnerships," and "corporations" do not violate the uniformity clause. See, 
e.g., Zunamon v. Zehnder, 308 Ill. App. 3d 69, 78 (1999) (finding 
no uniformity violation where trusts were treated differently than individuals 
as to allowable credit against income tax liability for taxes paid to other 
states). Second, defendants argue that the General Assembly could have 
reasonably concluded that employers as a group would be less burdened by an 
increase in fees than would individuals because of employers' ability to spread 
the cost over a larger budget or incorporate the cost into the price of goods 
and services. We find this last justification to be a reasonable one in the 
context of this case. The amount of the surcharge to be paid by each employer is 
based upon the amount of the premium paid by the employer to maintain workers' 
compensation insurance. As defendants suggest, this premium is likely to be 
based, at least in part, on the number of workers employed and the loss history 
of the particular employer. Accordingly, there may be some correlation between 
the surcharge and the frequency of an employer's utilization of the Commission's 
services. As with any other cost, an employer may incorporate it into the price 
of goods or services. The fact that the Budget Act does not require employees to 
bear a similar cost does not invalidate the classification established. 
Individual employees would not, for the most part, have the ability to absorb 
the cost of the surcharge that employers do. Even if this is not true in every 
case, perfect rationality is not required. Geja's Café v. Metropolitan Pier 
& Exposition Authority, 153 Ill. 2d 239, 252 (1992). Thus, we conclude that 
there exists a real and substantial difference between employers who pay the 
surcharge and employees who do not.
The Chamber does not address the question of whether there 
is a real and substantial difference between employers and employees for 
purposes of imposing the surcharge, largely because it disagrees that this is 
the appropriate classification. Accordingly, the Chamber has failed to carry its 
burden to show that the classification is either unsupported by the facts or 
insufficient as a matter of law.

C. Relationship Between the Classification 
and the Object of the Legislation
1. The Purpose of the Budget Act
Defendants identify three purposes of the legislation as 
it relates to the surcharge: (1) to fund the direct operations of the 
Commission; (2) to raise funds in excess of the Commission's budgeted needs to 
recapture the costs of operating or supporting the Commission borne by other 
state agencies; and (3) to raise revenue to assist in alleviating the state's 
budget shortfall.
The Chamber does not dispute the accuracy of the first and 
third purposes. However, it contends that it was not part of the Budget Act's 
purpose to impose the surcharge to pay for indirect costs of the Commission paid 
out of the GRF or by other state agencies. The Chamber argues that the Budget 
Act accomplished the payment of indirect costs through the administrative 
chargebacks that were assessed against specific funds and not by increases in 
fees. It cites a June 2004 report from the Illinois Economic and Fiscal 
Commission (Economic Commission) entitled "Monthly Revenue Briefing." This 
report contains a table referred to as "Special Transfers in FY 2004 as of 
6/30/2004." The report explains that these transfers were part of the FY2004 
budget resulting in part from Public Act 93-32. The table contains columns for 
each fund name and the dollar amount of (1) chargebacks, (2) funds sweeps, (3) 
Executive Order 10 transfers, and (4) fee increases for each fund. The Chamber 
notes that this report shows no chargebacks or fund sweep of any money in the 
Operations Fund. The only transfer to the GRF was the fee increase amount of 
$28,293,000, shown in the fourth column. Illinois Economic and Fiscal 
Commission, Monthly Revenue Briefing, June 2004, at 11. Therefore, it 
may be inferred that the Commission had no indirect costs to be paid. This, the 
Chamber argues, defeats defendants' indirect costs justification for the amount 
of the surcharge.
Defendants respond that all four of the mechanisms set 
forth in the Economic Commission's FY2004 report were designed to achieve the 
same goal, i.e., address the imbalance between direct and actual agency 
costs. Defendants explain that the different terms for the transfers used by the 
Economic Commission in its report correspond to the authority provided in 
sections 8h, 8j, and 8.42 of the State Finance Act. According to defendants, 
since the surcharge is a new fee, it was logical to classify a transfer of 
surcharge funds to the GRF as a fee increase, rather than an administrative 
chargeback. Thus, defendants suggest, factual issues remain unresolved as to the 
alleged indirect costs justification for the surcharge and this case should be 
remanded to the circuit court for further proceedings.
As further proof that the surcharge was intended to 
provide a general revenue source for the state and not to pay indirect costs of 
the Commission, the Chamber cites language from the Comptroller's Fiscal Year 
2003 Fee Imposition Report (Fee Report), in which the Comptroller discussed the 
10 largest revenue-generating fees (which includes the Operations Fund):
"The use of fee revenues for purposes not directly related 
to the service for which the fee is charged raises some interesting legal 
questions." Office of the Comptroller, Fee Imposition Report, Fiscal Year 
2003, at 5.
The Fee Report then goes on to discuss the uniformity 
clause and the due process clause of the Illinois Constitution. The Chamber 
takes this as an admission that the amount of the surcharge was deliberately set 
far in excess of that necessary to support the Commission's operations to 
provide a source of general revenue and not to pay indirect costs. The Chamber 
alleges that this mechanism was employed to avoid raising income taxes or sales 
taxes.
We disagree with the Chamber's interpretation of the 
quoted language from the Fee Report. The key phrase is "not directly related 
to." If, as the Chamber argues, the Comptroller's statement demonstrates that 
the excess revenues generated by the increased fees were intended to be used 
solely for purposes not at all related to the service provided, the Comptroller 
could have stated that the fee revenues were "not related" to the service for 
which the fees were charged. At best, the Comptroller's statement provides only 
equivocal support for the Chamber's argument that no excess revenues generated 
by the surcharge were intended to pay for any indirect costs of the Commission.
The Budget Summary submitted by the Governor to the 
General Assembly prior to enactment of Public Act 93-32 stated the purpose for 
increasing Non-Consumer User Fees:
"This budget proposes bringing user fees for state 
regulatory services and licenses in line with other states in order to recover 
actual program costs, generating over $300 million in new revenue to the state 
in fiscal year 2004." Illinois State Budget, Fiscal Year 2004, at 1-10.
A report from the Governor's Council of Economic Advisors 
(Council) provides further insight into the role increased user fees played in 
the budget. Under the heading "User Fee Adjustments," the report states in 
relevant part:
"The state currently collects almost 1,500 fees to cover 
the costs for relevant services. Many of the fees have not been adjusted for 
decades. Consequently they do not reflect the current cost of services they 
support and are below similar fees in other states.
This budget begins to address that imbalance by 
identifying the largest revenue generating fees that need to be adjusted to 
reflect the impact of inflation on fee-supported programs as well as other cost 
increases over time[.]" Council of Economic Advisors, Economic and Revenue 
Outlook, ch. 9-22.
Under the heading "Administrative Chargebacks," the 
Council's report states in relevant part:
"According to the Illinois State Comptroller, there were 
597 active individual funds in the official accounting system at the end of 
fiscal year 2002. Of the 597 active funds, 457 funds were appropriated. Funds 
have varying levels of administrative support activity based on the type of 
payments made from the fund. Some funds require a full array of state services, 
including accounting, investing, auditing, leasing, legal representation and 
others. Many of these services are provided by agencies financed through the 
General Revenue Fund.
Over time, the lack of GRF support from other funds has 
resulted in a 'free ride' for those funds at the expense of the General Revenue 
Fund. The subsidy of these funds reduces the amount available to help schools, 
the poor and seniors. Instead it supports various special interests *** In order 
to ensure that each fund is paying for the additional administrative burden and 
end the [de facto] GRF subsidy, this budget creates a chargeback 
program that reflects the level of state services required by each fund. This is 
expected to pay for support services provided by agencies funded through the 
General Revenue Fund of approximately $330 million.
To partially pay for prior administrative cost subsidies, 
$144 million in fund balances will be transferred from select funds to the 
General Revenue Fund in fiscal year 2003. The total amount of deficit reduction 
from administrative chargebacks is $474 million." Council of Economic Advisors,
Economic and Revenue Outlook, ch. 9-22.
The budget documents relied upon by the Chamber do not 
support its assertion that excess revenues generated by the surcharge were not 
intended to pay any indirect costs of the Commission but are intended to be used 
solely for purposes not related to the Commission. Rather, the documents are 
contradictory as to the treatment of excess revenues generated by the surcharge. 
For example, the Chamber concedes that the purpose of the fund sweeps was to 
transfer accumulated revenue in the affected funds to the GRF. However, since 
the Commission was not self-supporting prior to establishment of the surcharge, 
the question arises as to whether the Operations Fund contained accumulated 
revenue to transfer under the funds sweep mechanism. The documents relied on by 
the Chamber do not answer this question.
There is no dispute that, prior to the establishment of 
the surcharge, the Commission had no independent source of funding. The Chamber 
does not deny that all of the Commission's expenditures were paid out of the GRF. 
Accordingly, the Commission was one of the entities that received a "free ride" 
from the GRF. One of the purposes of the Budget Act was to compensate the GRF 
for this "free ride" and to eliminate or minimize this problem in the future. 
The Chamber's argument is that the Operations Fund was somehow exempted from 
this statutory purpose because the transfer of money out of that fund was not 
characterized as either an administrative chargeback or a fund sweep. Thus, 
according to the Chamber, the money from the surcharge was transferred to the 
GRF to be used solely for purposes not related to the Commission. However, as 
defendants point out, the surcharge is a new fee. Section 8j of the State 
Finance Act, added by the Budget Act, explicitly provided the Director with 
authority to transfer the new and increased fees out of their respective funds 
and into the GRF. Administrative chargebacks and fund sweeps were authorized by 
other sections. We note that the text of section 8j does not state a purpose for 
the monies transferred from the funds. On the other hand, section 8h, which 
authorizes the administrative chargebacks, and section 8.42, which authorizes 
the fund sweeps, do contain statements of purpose for the transfers. Section 8h 
states that the funds were to be transferred to the GRF "in order to help defray 
the State's operating costs for the fiscal year." 30 ILCS 105/8h (West 2004). 
Section 8.42 authorizes the transfers from the designated funds into the GRF "[i]n 
order to address the fiscal emergency resulting from shortfalls in revenue." 30 
ILCS 105/8.42 (West 2004). The Chamber has not addressed the significance of the 
language of these new statutory sections and how it may relate to the alleged 
purposes of the surcharge.
The Chamber has not demonstrated that the state simply 
bypassed the Operations Fund when it reclaimed money that had been spent by the 
GRF in the past on the various funds from which money was transferred. Thus, we 
conclude that the Chamber has not sustained its burden of proof to show that 
defendants' indirect costs justification is unsupported by the facts or is 
insufficient as a matter of law.

2. Reasonable Relationship
Defendants argue that the surcharge bears a reasonable 
relationship to the purposes of the Budget Act. According to defendants, the 
surcharge is reasonably related to the dual purposes of paying the direct and 
indirect costs of operating the Commission. Defendants also argue that the 
surcharge is reasonably related to the objective of the Budget Act to balance 
the state's overall budget in FY2004. Enactment of the surcharge helped to avoid 
the necessity of raising income taxes, which could be considered more 
burdensome, or raising sales taxes, which are regressive in nature. The Chamber 
argues that the surcharge is not reasonably related to the purpose of the Budget 
Act to raise additional revenue to balance the budget. The Chamber concedes that 
there is a reasonable relationship between the surcharge and recovering the 
costs of operating the Commission. In the Chamber's view, these costs equal the 
$13.7 million appropriated for the Commission's operation in FY2004. As 
discussed above, the Chamber contests the legitimacy of the alleged purpose of 
recovering indirect costs of operating the Commission. As to the objective of 
balancing the state's budget, however, the Chamber argues that the state went 
well beyond the legitimate purpose of raising revenue for the cost of operating 
the Commission. The Budget Act required employers to pay much more than an 
amount needed to fund the Commission's FY2004 appropriation and created a 
mechanism (section 8j of the Workers' Compensation Act) for moving the excess 
revenue out of the Operations Fund into the GRF. Thus, the Chamber argues that 
there is no relationship at all between the amounts of revenue transferred to 
the GRF and the service for which the surcharge was imposed.
In connection with this contention, the Chamber argues 
that the state may not raise revenue for the GRF by increasing user fees far 
beyond what is required to pay for the service for which the fees are charged. 
Thus, according to the Chamber, all amounts generated by the surcharge in excess 
of the $13.7 million budgeted for the Commission are unrelated to the Commission 
and amount to a tax on employers. However, at oral argument in this case, 
counsel for the Chamber made clear that the Chamber does not argue that no 
amount of unspent money in the Operations Fund may be transferred to the GRF. 
Counsel stated that if a fee is set to compensate the state for operating the 
Commission and it turns out that the cost is less than was anticipated, it would 
be "entirely appropriate" to transfer that money to the GRF. Thus, the Chamber 
takes issue with the intent of the Budget Act to increase fees to a 
point far beyond what is needed to pay for the cost of service or regulation. 
However, as we explain below, we need not address this issue at this time.
The Chamber's argument that a portion of the surcharge 
amounts to a tax rests upon its assumption that the Budget Act deliberately 
established the surcharge at a rate sufficient to generate far more revenue than 
is actually needed to operate the Commission. We have held that the Chamber 
failed to carry its evidentiary burden on the question of whether a purpose of 
the Budget Act was to generate revenue through the surcharge to pay indirect 
costs of the Commission. Those indirect costs, if any, would be in addition to 
the $13.7 million appropriated for the Commission for FY2004. The record before 
the circuit court does not contain sufficient information as to whether any of 
the amounts generated by the surcharge over and above the Commission's FY2004 
appropriation could be characterized as intended for purposes not related in any 
way to the Commission.
Another factor to consider in connection with this issue 
is that the surcharge does not generate all the funds deposited into the 
Operations Fund. Self-insured employers pay the Fund Fee, which is based on the 
amount of their payroll. The surcharge has generated approximately $19 million, 
as opposed to the Fund Fee's $11 million. Illinois Economic and Fiscal 
Commission, FY 2004 Fee and Penalty Increases, §I, at 35. Accordingly, 
the surcharge is not responsible for the entire $28 million that was transferred 
to the GRF. Further, we note that after the Chamber filed its complaint, the 
General Assembly reduced the rate of the surcharge by almost one-third, from 
1.5% to 1.01% of insurance premiums. 215 ILCS 5/416(b)(1) (West 2004). At the 
same time, the rate of the Fund fee was increased from 0.045% to 0.075%. 820 
ILCS 305/4d(b) (West 2004). How these facts may affect the analysis, if at all, 
is unknown. Given these uncertainties, it would be inappropriate at this time to 
address the Chamber's argument concerning the relationship between user fees and 
balancing the state's budget. We express no opinion regarding the state's method 
of balancing the FY2004 budget. We merely hold that the record has not been 
sufficiently developed to allow us to address the issue and that the circuit 
court's grant of summary judgment to the Chamber was premature. Accordingly, we 
hold that the Chamber has failed to carry its evidentiary burden under the 
uniformity clause.
Finally, the Chamber argues that defendants have waived 
their argument that summary judgment should not have been granted because 
material factual issues remain to be resolved. According to the Chamber, 
defendants did not make this argument before the circuit court. We have reviewed 
the record and conclude that the Chamber is incorrect. Counsel for defendants 
did raise the indirect costs issue before the circuit court during argument on 
the parties' motions. Thus, no waiver occurred.

III. Due Process Clause
The Chamber's argument alleging a due process violation in 
connection with the amount of the surcharge is, like its uniformity challenge, 
based upon the assumption that more than one-half of the revenue generated by 
the surcharge was transferred to the GRF to be used for purposes completely 
unrelated to the Commission. As we have held, questions of material fact exist 
that preclude summary judgment. Accordingly, we hold that the Chamber has failed 
to show a violation of its due process rights and that the circuit court should 
not have granted the Chamber's summary judgment motion on this ground.

IV. Takings Clause
The circuit court denied the Chamber's motion for summary 
judgment as to count III of its supplemental complaint. That count alleged that 
the Budget Act violated the takings clauses of the United States and Illinois 
Constitutions. The present appeal is before this court pursuant to Rule 304(a). 
The notice of appeal filed by defendants seeks reversal of (1) the circuit 
court's order granting the Chamber's motion for summary judgment and finding the 
Budget Act unconstitutional on uniformity and due process grounds and (2) the 
circuit court's subsequent injunctive order. An order denying a motion for 
summary judgment is ordinarily not a final order and is therefore not appealable. 
However, an exception exists where parties have filed opposing motions for 
summary judgment and the circuit court has granted one motion and denied the 
other. Chavda v. Wolak, 188 Ill. 2d 394, 403 (1999). That is not the 
case here. Defendants filed a motion to dismiss the complaint. They did not 
include the circuit court's order denying that motion in their notice of appeal, 
nor have they argued in their brief any issues regarding that order. The 
Chamber's supplemental complaint alleging a cause of action under the takings 
clause is still pending before the circuit court. The Chamber has not identified 
any ground upon which we may review the denial of summary judgment as to its 
cause of action under the takings clause. Instead, the Chamber presents its 
takings argument as an alternate ground upon which to affirm the circuit court's 
grant of summary judgment. However, were we to address its argument, we would, 
in effect, be reviewing the circuit court's order denying summary judgment on 
that ground. We decline to do so, as the alleged takings clause violation is not 
properly before this court.

CONCLUSION
For the reasons stated, we conclude that the circuit court 
erred in granting summary judgment to the Chamber. Accordingly, we reverse the 
circuit court's order granting the Chamber's summary judgment motion. We affirm 
the circuit court's order denying defendants' motion to dismiss and remand to 
the circuit court for further proceedings on the Chamber's original and 
supplemental complaints.



Circuit court judgment affirmed
in part and reversed in part;
cause remanded.