Opinion ID: 2035801
Heading Depth: 1
Heading Rank: 5

Heading: State Guarantee of Bonds

Text: Plaintiffs also contend that the Act constitutes a State guarantee of the bonds to be issued by the Authority, and therefore required a three-fifths vote for passage under article IX, section 9(b), of the Illinois Constitution. Because the Act was passed by a simple majority, they argue, the entire Act is invalid. We disagree that the State has guaranteed the bonds. Under the Act, all of the local Expansion Project taxes (as well as any excess funds from the Illinois Sports Facilities Authority Act) are collected and held in a trust fund which is outside the State treasury. Every year the chairman of the Authority certifies how much will be necessary to pay debt service on the bonds. The General Assembly may appropriate the amount certified, and if it does, then the money flows into the McCormick Place Expansion Project Fund inside the State treasury. The dispositive word here is may in may appropriate. The Act contemplates that the General Assembly will decide each year whether to appropriate the necessary amount. The General Assembly would be well within its discretion if it decided not to appropriate any money at all. Moreover, the Act requires the Authority to print a disclaimer on the face of the bonds, specifically stating that there is no State guarantee: The State shall not be liable on bonds of the Authority issued under this Section, those bonds shall not be a debt of the State, and this Act shall not be construed as a guarantee by the State of the debts of the Authority. The bonds shall contain a statement to this effect on the face of the bonds. Pub. Act 87-733, eff. July 1, 1992 (adding section 13.2 to the Metropolitan Pier and Exposition Authority Act); 1991 Ill. Laws 3636, 3667. Plaintiffs' argument necessarily relies on a broader construction of the word guarantee than ordinary usage. Plaintiffs suggest that, as used in article IX, guarantee should be interpreted to mean when a rational investor would believe that the State of Illinois has stepped up, in a way that it certainly was not required to, to make sure ( i.e. to guarantee) that the [Authority's] debt would be paid. Plaintiffs go on to suggest that if the marketplace reacts as if the State has guaranteed the bonds, there has been a de facto guarantee. We decline to give the term guarantee such an unclear and amorphous definition. We note that reliance on the marketplace's reaction to bonds would create a situation where the presence of a guarantee, and therefore the required number of votes for passage, is unclear until after a bill is passed. Such a reading is beyond the plain and commonly understood meaning of the term, the standard used when construing constitutional provisions absent a clear intent for a contrary meaning. Coalition for Political Honesty v. State Board of Elections (1976), 65 Ill.2d 453, 464, 3 111. Dec. 728, 359 N.E.2d 138. Finally, we note that, under the circumstances in this case, such a reading would not help plaintiffs in any event. Given the notice that any bondholder receives from the face of the bond certificate and the Act itself, as well as today's opinion, it can hardly be said that a rational bondholder would understand his bond to be backed by a guarantee of the State. Thus, even under plaintiffs' broad definition, the State has guaranteed nothing, and a simple majority was sufficient to pass the Act.