Opinion ID: 2527261
Heading Depth: 1
Heading Rank: 5

Heading: The Nature of the CRSTF

Text: ¶ 25 It has long been recognized that the legislature has the authority to order monies collected in one fund be transferred into a different fund. See Department of Public Welfare v. Haas, 15 Ill.2d 204, 215, 154 N.E.2d 265 (1958) (The fact that the legislature may provide that amounts, when collected, shall be placed in a certain fund does not ordinarily preclude a later General Assembly from ordering it paid into another fund or from abolishing the fund altogether.); see also Valstad v. Cipriano, 357 Ill.App.3d 905, 917-18, 293 Ill. Dec. 544, 828 N.E.2d 854 (2005) (the transfer of money accumulated in special funds into a general revenue fund is generally within the legislature's province and authority); Terra-Nova Investments v. Rosewell, 235 Ill.App.3d 330, 340, 176 Ill. Dec. 411, 601 N.E.2d 1109 (1992) (same). While plaintiffs do not dispute the legislature's general authority to divert funds for public purposes, they claim that, here, because the legislature made the CRSTF a trust fund outside of the State treasury, the legislature lacks authority to sweep funds out of the CRSTF and into the GRF. ¶ 26 In support of their claim, plaintiffs first argue that the CRSTF is a trust containing funds which are private, not public. According to plaintiffs, the portion of the registration fees paid by motorcyclists and allocated to the CRSTF is a separate surcharge paid over and above the fee for registering and licensing motorcycles. This surcharge, plaintiffs assert, never enters or passes through the state treasury before being placed into the CRSTF and, for this reason, never becomes public funds. Plaintiffs liken the surcharge paid by motorcyclists to the workers compensation premiums paid by Kentucky insurance carriers, self-insurance groups and self-insured employers in Thompson v. Kentucky Reinsurance Ass'n, 710 S.W.2d 854 (Ky.1986), or the medical malpractice annual assessment paid by health care providers in Wisconsin Medical Society, Inc. v. Morgan, 2010 WI 94, 328 Wis.2d 469, 787 N.W.2d 22. Plaintiffs conclude that the monies in the CRSTF are not state funds, but private money held in trust by the state, which is acting as trustee. ¶ 27 Alternatively, plaintiffs argue that, even if the registration and licensing fees are public funds when paid, they become private funds once they enter the CRSTF. This is so, plaintiffs contend, because the Eighty-seventh General Assembly, when it made the CRSTF into a trust fund outside of the State treasury, intended to makeand succeeded in makingthe CRSTF an irrevocable private trust. Plaintiffs contend that the trust is irrevocable because the Eighty-seventh General Assembly did not reserve the power to confiscate or revoke the trust. Further, because the trust is irrevocable, once the funds are deposited into the CRSTF, the state no longer holds legal title to the trust property and the beneficiaries' interest in the trust property is vested. As a result, plaintiffs assert that the funds in the CRSTF are private, not public, funds. ¶ 28 In either case, plaintiffs conclude that, because the monies in the CRSTF are private funds, any transfer of these funds into the GRF constitutes a taking of private property for public purposes without just compensation, in violation of our state and federal constitutions. Ill. Const.1970, art. I, § 15; U.S. Const., amend. V. As a result, plaintiffs contend that the funds contained in the CRSTF must remain inviolable such that the Ninety-third General Assembly or, indeed, any future General Assembly, is without authority to order the transfer of funds out of the CRSTF and into the GRF. We disagree. ¶ 29 First, plaintiffs wrongly characterize the funds which enter the CRSTF as private money. Although the Act permits federal grant money and private donations to be deposited in the CRSTF (see 625 ILCS 35/6 (West 2010)), plaintiffs do not allege, nor is there any evidence of record to suggest, that monies from these sources ever have been deposited into the CRSTF. Consequently, it is undisputed that all of the monies in the CRSTF have come from the legislative appropriation of a portion of the registration and licensing fees paid to the state by motorcyclists each year for the privilege of operating their motorcycles on the roadways of this state. Contrary to plaintiffs' assertion, this portion of the motorcyclists' registration and licensing fees is not a surcharge or some type of special assessment paid by motorcyclists separate and apart from the registration fee. Rather, the money which enters the CRSTF is simply a percentage of the fee collected by the state for the registration and licensing of motorcycles. Clearly, the fee charged by the state for motorcycle registration and licensing is state revenue and, therefore, the portion of this state revenue which the General Assembly has allocated to the CRSTF is also public money. Accordingly, we reject plaintiffs' argument that the monies deposited into the CRSTF are private funds held by the state as trustee. ¶ 30 We also reject plaintiffs' alternative argument that the funds become private once they are deposited into the CRSTF because the state, as settlor, created the CRSTF as an irrevocable private trust. A private trust is one which is created by the settlor for the benefit of the trust's beneficiaries, who must be identified or ascertainable. See Restatement (Second) of Trusts § 1, cmt. c; § 2, cmt. j (1959). It is generally true that the settlor of a private trust must expressly reserve the right of revocation for a trust to be revocable. See Restatement (Second) of Trusts § 330 (1959). However, the Restatement (Second) of Trusts also provides that when a settlor has failed to expressly indicate whether a trust is subject to revocation or amendment, the question is one of interpretation. Restatement (Second) of Trusts § 330 (1959). ¶ 31 Plaintiffs contend that we should interpret the CRSTF as an irrevocable trust because the Eighty-seventh General Assembly, as settlor, did not reserve the right of revocation. In addition, plaintiffs contend that legislative historyincluding the Governor's veto message and the legislative debatesindicates that it was the legislature's intent that the CRSTF be held, irrevocably, beyond the power of future legislatures to sweep. ¶ 32 While it is true that the Eighty-seventh General Assembly did not expressly reserve the right of revocation, it also did not expressly create the CRSTF as an irrevocable trust. In an attempt to discern legislative intent, we have reviewed the legislative debates and find that they do not unequivocally support the notion that the legislature intended to make the CRSTF an irrevocable trust. More importantly, we must reject plaintiffs' assertion that the legislature intended to make the CRSTF an irrevocable trust because finding it to be such would be contrary to settled principles of law and would place an unconstitutional restraint on the legislature's plenary power. ¶ 33 The Illinois General Assembly is a legislative body required by our constitution to make appropriations for all expenditures of public funds. Ill. Const.1970, art. VIII, § 2. Our constitution provides that [p]ublic funds, property or credit shall be used only for public purposes. Ill. Const.1970, art. VIII, § 1. Because we have found that the funds which are deposited into the CRSTF are public funds, the legislature would have violated its constitutional duty if it used these funds to create vested rights in private individuals. See Fumarolo v. Chicago Board of Education, 142 Ill.2d 54, 104, 153 Ill.Dec. 177, 566 N.E.2d 1283 (1990) ([A]bsent some clear indication to the contrary, it is presumed that `a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise.') (quoting National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 466, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985)). ¶ 34 Further, interpreting the CRSTF as an irrevocable private trust would mean that the Eighty-seventh General Assembly placed an unconstitutional restraint on the legislature's plenary power. In Choose Life Illinois, Inc. v. White, 547 F.3d 853 (7th Cir.2008), it was held axiomatic that one legislature cannot bind a future legislature. And in Village of Rosemont v. Jaffe, 482 F.3d 926, 937 (7th Cir.2007), the court held, [i]t is for each elected legislature to express the will of the people as it sees fit. See also Reichelderfer v. Quinn, 287 U.S. 315, 318, 53 S.Ct. 177, 77 L.Ed. 331 (1932) ([T]he will of a particular Congress    does not impose itself upon those to follow in succeeding years.). The United States Supreme Court, in National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co . described as elementary the proposition that the principal function of a legislature is to make laws which establish the policy of the state and that policy is inherently subject to revision and repeal. National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. at 466, 105 S.Ct. 1441. To hold otherwise, the Court said, would limit drastically the essential powers of a legislative body. National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. at 466, 105 S.Ct. 1441. ¶ 35 Based on the above, we conclude that the CRSTF is not an irrevocable trust. That being so, the state maintained legal title to the funds placed in the CRSTF. Thus, the public nature of the funds did not change once they were placed in the CRSTF. Since the funds held in the CRSTF remained public funds, the legislature's sweep of monies out of the CRSTF pursuant to the FY2004 and FY2005 BIMPs did not constitute an unconstitutional taking of private property for public purpose. ¶ 36 In reaching this determination, we find persuasive two supreme court opinions from sister states: Board of Trustees of the Tobacco Use Prevention & Control Foundation v. Boyce, 2010-Ohio-6207, 127 Ohio St.3d 511, 941 N.E.2d 745, and Barber v. Ritter, 196 P.3d 238 (Colo.2008) (en banc). ¶ 37 Boyce involved the Tobacco Use Prevention and Cessation Trust Fund, which the Ohio General Assembly created in 2000. The legislature allocated to this fund $235 million, which came from the proceeds of a master settlement agreement which several states, including Ohio, had entered into with United States tobacco-product manufacturers to resolve litigation for the recovery of health-care expenses incurred by the states as a result of tobacco-related illnesses. After creating the fund, the legislature appropriated the money to an endowment fund, which was to be in the custody of the treasurer of state but    not be a part of the state treasury. The money was to be used to pay for programs and research related to tobacco-use prevention and cessation. Boyce, 2010-Ohio-6207, ¶ 3, 127 Ohio St.3d 511, 941 N.E.2d 745. Eight years after the fund was created, the legislature passed new legislation which liquidated the endowment fund and deposit[ed] the lesser of $40 million or 14.8 percent of the proceeds into the state treasury to the credit of a tobacco-use-prevention fund, and deposit[ed] the remaining proceeds from the liquidation (approximately $190 million) into the state treasury to the credit of a jobs fund. Id. ¶ 5. In response to this new legislation, suit was brought by certain former smokers for declaratory relief. The plaintiffs claimed that a trust had been created, which the General Assembly did not have the power to revoke. Plaintiffs sought judgment declaring that (1) the new legislation was unconstitutional under the contract clauses of section 10 of article I of the Constitution of the United States and section 28 of article II of the Ohio Constitution and (2) that the legislation illegally attempts to appropriate non-treasury funds in breach of an irrevocable trust. Id. ¶ 6. ¶ 38 According to the plaintiffs, the money in the endowment fund was not public funds because the enabling statute provided that the endowment fund shall be in the custody of the treasurer of state but shall not be a part of the state treasury. Also, the plaintiffs maintained that, because the fund was outside the state treasury, the legislature intended to create a trust setting the funds permanently outside the control of future legislation. The Ohio Supreme Court rejected these arguments, stating: Although the General Assembly's plenary legislative power is expansive, it is not all-inclusive. It does not include the ability to bind future General Assemblies. 'No general assembly can guarantee the continuity of its legislation or tie the hands of its successors.' Id. ¶ 16. Quoting State ex rel. Fletcher v. Executive Council, 207 Iowa 923, 223 N.W. 737, 740 (1929), the Ohio Supreme Court went on to state, `[N]o General Assembly has power to render its enactment irrevocable and unrepealable by a future General Assembly. No General Assembly can guarantee the span of life of its legislation beyond the period of its biennium. The power and responsibility of legislation is always upon the existing General Assembly. One General Assembly may not lay its mandate upon a future one. Only the Constitution can do that.    The power of a subsequent General Assembly either to acquiesce or to repeal is always existent.' Boyce, 2010-Ohio-6207, ¶ 16, 127 Ohio St.3d 511, 941 N.E.2d 745. ¶ 39 The second case, Barber v. Ritter, 196 P.3d 238 (Colo.2008) (en banc), is very similar to the situation in the case at bar. In Barber, the Colorado Supreme Court was asked to consider the constitutionality of certain legislation which the Colorado General Assembly had passed in response to an economic turndown which had caused revenue shortfalls in its general fund. As a remedial measure, the legislature transferred $442 million out of 31 special funds and into the general fund. The Colorado Supreme Court addressed the petitioners' argument that three of the cash funds the Colorado Children's Trust Fund (Colo. Rev.Stat. § 19-3.5-106 (2008)), the Severance Tax Trust Fund (Colo.Rev.Stat. § 39-29-109 (2008)), and the Unclaimed Property Trust Fund (Colo.Rev.Stat. § 38-13-116.5 (2008))were public trusts and that the transfer of monies from these cash funds constituted a misappropriation of the trust corpus, triggering an obligation to repay the transferred monies. ¶ 40 The Colorado Supreme Court noted: Petitioners argue that the General Assembly's lack of power to amend the statutes in question arises from the special status of the funds created by those statutes as trusts. Colorado follows the view of most jurisdictions that a trust, once created, may not be revoked by the settlor without the consent of all beneficiaries, unless the settlor has explicitly reserved to himself or herself the power to do so unilaterally. [Citations.] None of the statutes creating the funds explicitly reserve to the General Assembly the power as settlor to revoke or amend them. However, we have repeatedly recognized that the General Assembly's power over appropriations is constitutionally derived and have characterized this power as absolute and plenary. [Citations.] To hold that the General Assembly could limit this plenary power to appropriate by creating an irrevocable public trust would be to effectively hold that the General Assembly could abrogate its constitutional powers by statute. This is not the law. Our constitution requires that amendments thereto be approved by a two-thirds majority of each legislative house and an affirmative majority of the electorate. Colo. Const. art. XIX, § 2.    We therefore decline to read the cash funds' enabling legislation as creating irrevocable trusts that would unconstitutionally restrain the legislature's plenary power over appropriations. (Emphasis omitted.) Barber v. Ritter, 196 P.3d at 253-54. ¶ 41 Like the courts in Boyce and Barber, we conclude that our legislature cannot create an irrevocable trust with public money. If we were to hold otherwise, it would place an unconstitutional restraint upon the legislature's plenary power. Accordingly, we reject plaintiffs' claim that the money allocated to the CRSTF, once deposited, irrevocably became the property of the beneficiaries of the trust and, therefore, was private money. For that reason, we find no basis for holding that the legislature is without authority to transfer funds out of the CRSTF and into the GRF. ¶ 42 Necessity of Amending the Act ¶ 43 Plaintiffs' final contention is that, even if the legislature has the authority to remove money from the CRSTF, it may only do so by amending the enabling statute, i.e., the Cycle Riders Safety Training Act. Again we disagree. ¶ 44 As explained above, we have determined that, to whatever extent the CRSTF is a valid trust, it is not an irrevocable trust. The Restatement (Second) of Trusts provides in comment n of section 330, Ordinarily a power to revoke the trust will be interpreted as including a power to revoke the trust in part by withdrawing a part of the trust property from the trust. Restatement (Second) of Trusts § 330, cmt. n (1959). There is nothing to indicate that a settlor is required to withdraw funds from a revocable trust in a particular manner or by a particular means. ¶ 45 In the present case, it is clear that the legislature did not want to change the CRSTF, nor did it seek to alter the amount or manner in which funds are allocated to CRSTF. The legislature simply wanted to remove a certain amount of the trust property. We see no reason, therefore, why the legislature cannot pass separate legislation which permits the sweep of funds out of the CRSTF.