Opinion ID: 3134534
Heading Depth: 2
Heading Rank: 3

Heading: The Authority’s Rejection of the City’s Budget

Text: 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: “While it is probably not possible to enumerate all the kinds of acts or omissions which will constitute arbitrary and capricious conduct, the following guidelines apply. Agency action is arbitrary and capricious if the agency: (1) relies on factors which the legislature did not intend for the agency to consider; (2) entirely fails to consider an important aspect of the problem; or (3) offers an explanation for its decision which runs counter to the evidence before the agency, or which is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. [Citation.] While an agency is not required to adhere to a certain policy or practice forever, sudden and unexplained changes have often been considered arbitrary. [Citation.] The standard is one of rationality. The scope of review is narrow and the court is not, absent a ‘clear error of judgment’ [citation], to substitute its own reasoning for that of the agency.” Greer , 122 Ill. 2d at 505-06. 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.