Title: City of East St. Louis v. East St. Louis Financial Advisory Authority
Citation: N/A
Docket Number: 87076
State: Illinois
Issuer: Illinois Supreme Court
Date: December 16, 1999

Docket No. 87076-Agenda 35-September 1999.
THE CITY OF EAST ST. LOUIS, Appellant, v. THE EAST ST. LOUIS FINANCIAL ADVISORY AUTHORITY,
Appellee.
Opinion filed December 16, 1999.
JUSTICE HEIPLE delivered the opinion of the court:
This case presents two issues: first, whether the Financially Distressed City Law (hereinafter, the Act) (65 ILCS 5/8-12-1
et seq. (West 1996)) empowers a "Financial Advisory Authority" to impose a budget upon a financially distressed city after
that city fails to adopt a satisfactory budget; and second, whether the East St. Louis Financial Advisory Authority (the
Authority) acted in an arbitrary and capricious manner in rejecting the second of two proposed city budgets submitted by
the City of East St. Louis (the City). For the reasons that follow, we hold that the Act does not empower a Financial
Advisory Authority to impose a budget upon a city; however, we also hold that the Authority did not act in an arbitrary and
capricious manner when it rejected the City's second proposed budget.
BACKGROUND
Following the enactment of the Financially Distressed City Law in 1990, the City adopted an ordinance requesting that it be
designated a financially distressed city under the Act. Consistent with that designation, the City thereafter has been required
each year to submit its annual budget, after adoption by the City, to the Authority for approval. 65 ILCS 5/8-12-16 (West
1996).
In accordance with the statutory procedure, on November 12, 1997, the City adopted a budget for 1998 and submitted it to
the Authority for its approval. On November 22, 1997, the Authority rejected the City's first proposed budget and returned
it to the City for correction. The Authority listed several reasons for its rejection of the budget: (1) the City's revenue
estimates failed to comply with the estimates approved by the Authority; (2) the budget failed to separate grants and special
revenues; (3) the salaries of certain city employees were improperly charged to the Motor Fuel Tax Fund; (4) the budget
failed to comply with certain requirements of the federal "COPS FAST" grant program; (5) several budget items, including
"electricity," "vehicle maintenance," "unemployment insurance," "overtime," and "sewer maintenance," were underfunded;
and (6) the budget improperly failed to fund the position of a fire department lieutenant who was then on active military
leave.
On December 7, 1997, the City adopted a revised budget and submitted that budget to the Authority for approval. On
December 20, 1997, the Authority rejected the City's revised budget. According to the Authority, the revised budget still
failed to fully comply with the requirements of the federal COPS FAST grant program. In particular, under the revised
budget, the City proposed to fund certain vacant police officer positions in the budget while other officers would be paid
with federal grant money. Thus, the City was proposing to pay eight officers with grant money while at the same time
cutting back on the number of officers being paid by the City and using the salary savings for other purposes. This,
according to the Authority, was a violation of the "maintenance of effort" requirement of the grant program and rendered
the City's budget inconsistent with the City's three-year financial plan. Moreover, the Authority noted that several budget
line items, including electricity, unemployment insurance, overtime, sewer maintenance, and vehicle maintenance,
remained underfunded in the revised budget. The Authority stated that the underfunding of these items rendered the budget
not reasonably capable of being achieved.
In addition to the above defects, the Authority alleged new problems with the City's revised budget. First, the revised
budget proposed to fund $400,000 in maintenance work with sewer revenues that had never generated more than $100,000.
Second, the Authority concluded that the City's proposed $200,000 reduction in the amount budgeted for the public library
was unlawful because it improperly reduced the library's proportionate share of the City's personal property tax
replacement funds from 23% to 7%.
At the Authority's December 20 meeting, immediately after the roll-call vote rejecting the City's second budget, the
members of the Authority discussed how to proceed with respect to the City's budget. First, the Authority could simply
allow its rejection of the budget to stand and take no further action. Second, the Authority could act pursuant to its statutory
authority to intercept funds due to the City from the state. 65 ILCS 5/8-12-21(2) (West 1996). Third, the Authority could
simply impose a budget of its own making upon the city. A copy of the Authority's proposed budget, which had already
been prepared by the Authority's staff, was distributed among the Authority's members. After hearing comments from
several of the Authority's directors who expressed the opinion that intercepting state payments was too harsh a remedy, the
Authority unanimously voted to impose its budget on the City.
On December 24, 1997, the City filed a complaint against the authority requesting that the circuit court of St. Clair County
enjoin the Authority from intercepting payments due the City from the state Treasurer, and further requesting that the court
declare the Authority's imposition of a budget on the City to be "void, unconstitutional, improper and otherwise contrary to
law ab initio." On December 30, 1997, the City obtained new counsel and filed an amended complaint. On December 31,
1997, the court entered an order whereby the parties agreed to operate under the Authority's proposed budget, except that
the City was required to operate under its own proposed budget regarding the layoff of employees. The Authority also
agreed not to intercept any funds due to the City from the state Treasurer. The agreement also required the parties to
continue to negotiate in good faith to obtain an approved budget.
On April 15, 1998, the City filed a four-count second-amended complaint. In count I, the City sought a declaration that the
Financially Distressed City Law did not permit the Authority to impose a budget on the City. The City also requested that
the Authority be enjoined from imposing its budget on the City. Count II requested that the court find that the Authority
acted arbitrarily and capriciously when it rejected the City's second proposed budget. Count III, entitled "Petition for Writ
of Certiorari," requested that the court review the decision of the Authority to reject the City's proposed budget and impose
its own budget on the City. Count IV requested injunctive relief prohibiting the Authority and its agents from taking certain
steps to implement the budget.
On April 17, 1998, the court entered an order denying the City relief, stating that the Authority had not acted arbitrarily and
capriciously in rejecting the City's budget, and that the Authority had not acted beyond the scope of its powers in imposing
a budget on the City. The appellate court affirmed. No. 5-98-0288 (unpublished order under Supreme Court Rule 23). We
granted the City's petition for leave to appeal and now affirm in part and reverse in part.
ANALYSIS
I. The Imposition of Budget by the Authority
The City argues that the appellate court erred in holding that the Act permitted the Authority to impose a budget of its own
making on the City. The City points out that no provision of the statute expressly confers such a power on the Authority,
and further argues that it would be improper to infer such an important power from the more general enabling language of
the statute. The Authority, in contrast, argues that this court should infer the power to impose a budget from statutory
language granting the Authority "all powers necessary to meet its responsibilities and to carry out its purposes and the
purposes of this Division." 65 ILCS 5/8-12-6(b) (West 1996). The Authority argues that such an inference is proper in light
of the broad remedial purposes of the Act.
This court has consistently held that the starting place in interpreting the meaning of a statute is to ascertain and give effect
to the legislative intent in enacting the statute. See, e.g., Balmoral Racing Club, Inc. v. Illinois Racing Board, 151 Ill. 2d 367, 390 (1992); Fumarolo v. Chicago Board of Education, 142 Ill. 2d 54, 96 (1990); People v. Madison, 121 Ill. 2d 195,
200 (1988). " ' "This is to be done primarily from a consideration of the legislative language itself, which affords the best
means of [the statute's] exposition ***." ' " Maloney v. Bower, 113 Ill. 2d 473, 479 (1986), quoting Franzese v. Trinko, 66 Ill. 2d 136, 139 (1977), quoting Western National Bank v. Village of Kildeer, 19 Ill. 2d 342, 350 (1960). We are also
mindful that "[w]e should not attempt to read the statute other than in the manner in which it was written." Kozak v.
Retirement Board of the Firemen's Annuity &amp; Benefit Fund, 95 Ill. 2d 211, 215 (1983).
Thus, in determining whether the Act permitted the Authority to impose a budget on the City after the City allegedly failed
to adopt a satisfactory budget on its own, we must look first to the language of the statute itself. Section 8-12-16 of the Act
describes the role which the legislature intended for the Authority to have in the budgetmaking process:
It is clear from the text of this statute that the General Assembly intended for the elected city government to retain its role as
the body charged with crafting and adopting a budget. The statute commands the financially distressed city to "develop,
adopt and submit *** an annual budget" for the Authority's review. The Authority, for its part, is given a direct command
to approve the budget if it complies with the statutory requirements, and to reject the budget if it does not. Nowhere in the
statute has the General Assembly even hinted that the Authority may simply take over and draft the budget itself once two
proposed city budgets have been rejected. On the contrary, the statute plainly states that even after a city's proposed budget
is rejected, the budgetmaking power remains with the city. The statute provides: "In the event of rejection, the Authority
may prescribe a procedure and standards for revision of the Budget by the city." (Emphasis added.) 65 ILCS 5/8-12-16(3)
(West 1996).
In addition to the procedure described in section 8-12-16, the statute gives the Authority a powerful tool in dealing with a
city that fails to submit an acceptable budget proposal. Section 8-12-21(2) of the statute provides:
In this case, the Authority declined to resort to this statutory enforcement mechanism after several of the Authority's
directors expressed the view that intercepting funds would cause undue hardship for the citizens of East St. Louis. That
decision was well within the discretion of the Authority. However, having rejected the enforcement mechanism provided by
the General Assembly, the Authority did not thereby free itself to craft an alternative remedy not provided for by the statute.
Attempting to overcome the clear absence of a statutory provision expressly conferring a budgetmaking power upon the
Authority, the Authority relies heavily upon section 8-12-6 of the statute, which sets forth the purposes and powers of the
Authority. That section provides, in its entirety:
The Authority argues that the statutory language "all powers necessary to meet its responsibilities and to carry out its
purposes and the purposes of this Division" should be interpreted to confer upon the Authority the power to impose a
budget where a city has failed to draft a satisfactory budget on its own. The Authority specifically emphasizes the statutory
phrases "[e]xcept as expressly limited by this Division" and "including, but not limited to." According to the Authority, this
statutory language, when read in conjunction with the absence of a clear prohibition of budgetmaking by the Authority, is
broad enough to evince an intent by the legislature to authorize the Authority to impose its budget on the City under the
facts of this case.
We decline to adopt the Authority's extraordinary construction of this statutory language. The doctrine of ejusdem generis
provides that when a statute lists several classes of persons or things but provides that the list is not exhaustive, the class of
unarticulated persons or things will be interpreted as those "others such like" the named persons or things. Board of
Trustees of Southern Illinois University v. Department of Human Rights, 159 Ill. 2d 206, 211 (1994); Coldwell Banker
Residential Real Estate Services of Illinois, Inc. v. Clayton, 105 Ill. 2d 389, 396 (1985); Farley v. Marion Power Shovel
Co., 60 Ill. 2d 432, 436 (1975). Here, the General Assembly expressly listed six specific types of powers which it believed
the Authority would require in order to carry out its purposes and the purposes of the statute. These enumerated powers deal
with the Authority's power to run its day-to-day operations, to execute legal documents, to hire employees and consultants,
and to pay the Authority's bills. The power of the Authority to bypass the elected governance of a city, to draft a budget for
that city, and to require the city to live under the Authority's budget is simply not of like kind. Accordingly, the general
language of section 8-12-6 of the Act cannot fairly be read to confer upon the Authority the power to impose a budget upon
a city.
In reaching a contrary conclusion, the appellate court relied upon this court's decision in East St. Louis Federation of
Teachers, Local 1220 v. East St. Louis School District No. 189 Financial Oversight Panel, 178 Ill. 2d 399 (1997). The
appellate court's reliance on Local 1220 was misplaced. At issue in Local 1220 was the authority of a school district
financial oversight panel to order a school district not to renew the contract of its superintendent. In that case, this court held
that the panel had acted within its authority under a statute which authorized the panel to approve or reject contracts made
by the school board. Local 1220, 178 Ill. 2d  at 409-10. Thus, by refusing to approve a renewal of the superintendent's
contract, the oversight panel was simply exercising a power expressly granted to it by the legislature. The facts of the
instant case are inapposite. Here, the Authority did far more than exercise an express power. Rather, it exercised its express
power to reject the City's proposed budget, but then went further and drafted, adopted, and imposed a budget of its own
making upon the City. For Local 1220 to be even arguably analogous to the instant case, the oversight panel would have
had to reject the superintendent's contract, and then gone out and hired a new superintendent on its own. As the facts of that
case were otherwise, however, Local 1220 provides no authority for the appellate court's holding in the instant case.
In reaching our conclusion today that the Authority exceeded its statutory mandate by imposing a budget upon the City of
East St. Louis, this court is not unmindful of the serious financial difficulties which the City of East St. Louis has
experienced in recent years. Nor do we question the good faith of the members of the Authority who believed that the
imposition of a budget drafted by the Authority was the most expedient solution to a difficult financial situation and would
be in the best interests of the citizens of East St. Louis. Nevertheless, whatever the wisdom of a law that would permit the
Authority to impose a realistic budget upon a city that has failed or refused to do so, the power to enact such a law lies not
with the Authority, nor even with this court. Rather, as this court has consistently and recently noted:
Thus, where the legislature has not chosen to invest the Authority with the power to impose a budget upon a city, it would
be wholly improper for this court to substitute its judgment for that of the only branch of government constitutionally
authorized to make such choices.
II. The Authority's Rejection of the City's Budget
The City next contends that the lower courts erred in finding that the Authority did not act arbitrarily and capriciously when
it rejected the City's second proposed 1998 budget. In Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462,
505-06 (1988), this court discussed the proper analysis for determining whether the action of an agency is arbitrary and
capricious. We wrote:
In the instant case, the City argues that the Authority's rejection of the revised budget was arbitrary and capricious because
the City had corrected all of the defects of which the Authority had complained with respect to the first budget. The City
makes the related argument that it was arbitrary and capricious for the Authority to raise new objections to items in the
City's revised budget after the Authority had failed to object to those same items in the original budget.
In response, the Authority argues that while the City did fix some of the problems that were present in the first budget,
certain other defects remained unsolved. In particular, both the City's original and revised budget failed to comply with the
"maintenance of effort" requirement of the federal COPS FAST grant program. In addition, the Authority maintains that
certain budget items, including "electricity," "vehicle maintenance," "unemployment insurance," "overtime," and "sewer
maintenance," were underfunded in the City's first budget, and remained underfunded in the City's revised budget.
The Authority also states that when it reviewed the City's revised budget, it noticed that the City was planning to fund
$400,000 in maintenance work with sewer revenues that had never generated more than $100,000. The Authority argues
that it was obligated to object to this defect in the budget, regardless of when it was first discovered, because the Authority
is statutorily required to approve only those budgets which comply with the criteria set forth in section 8-12-16 of the
statute.
After reviewing both sides' arguments on the validity of the reasons for the rejection of the City's revised budget, we
conclude, as did the courts below, that: (1) the Authority did not rely on factors the legislature did not intend, (2) the
Authority did not fail to consider an important aspect of the problem, and (3) the Authority's explanation for its decision
does not run counter to the evidence, nor is it so implausible that it cannot be ascribed to a difference in view. Moreover, we
agree that the Authority did not act improperly when it objected to a flaw in the revised budget even after it failed to object
to that same flaw in the original budget. While it would, of course, have been preferable if the Authority had discovered and
pointed out every flaw contained in the original budget when it first rejected that budget, the Authority's failure to do so did
not render its subsequent objection arbitrary or capricious, particularly when considered in the context of the other specific
complaints made by the Authority regarding the revised budget. Accordingly, we hold that the Authority did not act in an
arbitrary or capricious manner when it rejected the City's revised 1998 budget.
CONCLUSION
For the reasons expressed above, we reverse the holdings of the appellate and circuit courts that the Financially Distressed
City Law conferred upon the Authority the power to impose a budget upon the City. We affirm, however, the appellate
court's and the circuit court's holdings that the Authority did not act in an arbitrary or capricious manner in rejecting the
City's revised 1998 budget.
Appellate court judgment affirmed in part and reversed in part;
circuit court judgment affirmed in part and reversed in part.
JUSTICE BILANDIC, dissenting:
I respectfully dissent from the portion of the majority opinion that holds that the Authority did not have the power to adopt
a 1998 budget for the City under the facts of this case.
The Financially Distressed City Law (the Act) (65 ILCS 5/8-12-1 et seq. (West 1996)) requires the City to submit its
proposed budget no later than 60 days prior to the commencement of its fiscal year. See 65 ILCS 5/8-12-16 (West 1996).
The City's fiscal year is the calendar year. The City's budget for the period commencing January 1, 1998, and ending
December 31, 1998, is involved in this case. The City adopted its first proposed 1998 budget and submitted it to the
Authority for approval on November 12, 1997. Incredibly, the City adopted this budget 10 days later than required by the
Act. After adopting an ordinance requesting that it be designated a financially distressed city under the Act, the City failed
to comply with the provisions of the Act. Here, the Authority did what the City should have done-it adopted a timely and
balanced budget. The Authority did so only after two failed attempts by the City.
The majority erroneously decides that the Act does not allow the Authority to impose a budget on the City under the facts
of this case. The Act gives the Authority "all powers necessary to meet its responsibilities and to carry out its purposes and
the purposes of [the Act]." See 65 ILCS 5/8-12-6(b) (West 1996). With less than two weeks remaining in 1997, the
Authority properly exercised these powers to rescue the City from its inept financial performance. Only harm could be
visited on the citizens and taxpayers of the City without a timely approved budget.
The broad language of the Act shows an intent by the legislature to give the Authority the power to impose a budget on the
City. The provisions of the Act reveal that the legislature deemed it critical for a financially distressed city to have a
balanced budget. As the circuit court found, prohibiting the Authority from imposing a budget "would be to limit their
choice to either throwing the City into the same financial chaos and distress which the Law was enacted to prevent or
compromising the City's financial integrity which is contrary to the legislative intent." The Authority was acting within the
broad powers that the Act provides to it. The Authority determined that imposing a budget on the city was the best way "to
provide a secure financial basis for the continued operation" of the City. See 65 ILCS 5/8-12-2(b) (West 1996).
Moreover, the Act should be read as a whole, with all relevant parts considered. See Kraft, Inc. v. Edgar, 138 Ill. 2d 178,
189 (1990). Section 8-12-6(b) states that the Authority shall have all powers necessary to meet its responsibilities and to
carry out its purposes and the purposes of the Act "including, but not limited to" certain enumerated powers. The word
"including" is a term of enlargement, not limitation. People v. Valley Steel Products Co., 71 Ill. 2d 408, 419 (1978). The
term should not be construed to mean that those things not enumerated are excluded, where such a construction would
override the intent of the legislature. See Valley Steel Products Co., 71 Ill. 2d  at 419. The "including, but not limited to"
language of the Act shows that the legislature contemplated that the Authority has powers other than the powers specifically
enumerated. Indeed, two of the provisions in section 8-12-6(b) describe certain enumerated powers by referencing the
broad power that the Act provides to the Authority. See 65 ILCS 5/8-12-6(b)(2), (b)(5) (West 1996). Thus, the fact that the
Act does not explicitly grant the Authority the power to impose a budget is not determinative. The legislature granted the
Authority "all powers necessary" to carry out the Act's purposes. The legislature stated that a purpose of the Act is "to
provide a secure financial basis for the continued operation of a financially distressed city." 65 ILCS 5/8-12-2(b) (West
1996). A legitimate budget is necessary to provide the City with a secure financial basis.
The legislative history also reveals that the Act was intended to correct the problems of financially distressed cities.
Representative Stephens made the following comments in support of the Act:
Representative McNamara added the following:
These comments support that the legislature intended to give the Authority broad powers to rectify the financial problems
of the City. Here, the Authority determined that the City appeared unwilling to adopt a legitimate budget. Consequently, the
Authority voted to adopt its own budget for the City. The legislature gave the Authority broad powers to effectuate the
purposes of the Act. Under these broad powers, the Authority was able to impose its budget as a means to provide a secure
financial basis for the continued operation of the City.
For the foregoing reasons, I would hold that the Authority properly imposed a budget on the City pursuant to the
Financially Distressed City Law. I therefore respectfully dissent.