Court Opinion

ID: 9720179
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:19:11.405533+00
Date Added: 2024-06-11T18:24:13.984545
License: Public Domain

JUSTICE FREEMAN, dissenting: The City of Chicago and the Illinois Commerce Commission (defendants) have filed a petition for rehearing in this cause. Because I believe that this court’s opinion may have been in error, I respectfully dissent from the denial of the petition for rehearing. The legislature enacted the Telecommunications Municipal Infrastructure Maintenance Fee Act (Act) (35 ILCS 635/1 et seq. (West 1998)), effective January 1, 1998. Section 5 of the Act provides in part: “This Act is intended to abolish the invested capital tax on telecommunications retailers ***. This Act is also intended to abolish municipal franchise fees with respect to telecommunications retailers, create a uniform system for the collection and distribution of fees associated with the privilege of use of the public right of way for telecommunications activity, and provide municipalities with a comprehensive method of compensation for telecommunications activity including the recovery of reasonable costs of regulating the use of the public rights-of-way for telecommunications activity.” 35 ILCS 635/5 (West 1998). The invested, capital tax (35 ILCS 610/2a.1 (West 1996)) had been imposed on invested capital of utilities. Municipal franchise fees were imposed by municipalities upon landline telecommunications retailers to compensate the municipalities for the use of the public rights-of-way by these retailers for telecommunications activity and the maintenance and repair of equipment in the public rights-of-way. The franchise fees included a percentage of all lease revenues that wireless telecommunications retailers paid to landline telecommunications retailers for their use of the equipment maintained by the landline telecommunications retailers in the public rights-of-way. The Act replaced the invested capital tax and the franchise fees with a state infrastructure maintenance fee imposed upon landline telecommunications retailers (35 ILCS 635/15(a), (b) (West 1998)); an optional infrastructure maintenance fee imposed upon landline telecommunications retailers (35 ILCS 635/15(c), (d) (West 1998)); and a municipal telecommunications infrastructure maintenance fee imposed upon all telecommunications retailers, including wireless telecommunications retailers (Municipal IMF) (35 ILCS 635/20 (West 1998)). Pursuant to section 20 of the Act, a municipality could impose a Municipal IMF upon telecommunications retailers by adopting an ordinance to that effect. If the municipality had a population of more than 500,000, it could impose a Municipal IMF of “2.0% of all gross charges charged by the telecommunications retailer to service addresses in the municipality for telecommunications originating or received in the municipality.” 35 ILCS 635/20(b) (West 1998). In a municipality with a population of 500,000 or fewer, the Municipal IMF was limited to “1.0% of all gross charges charged by the telecommunications retailer to service addresses in the municipality for telecommunications originating or received in the municipality.” 35 ILCS 635/20(b) (West 1998). The City of Chicago passed an ordinance imposing a Municipal IMF of 2% on “all gross charges charged by telecommunications retailers to a service address in the city for telecommunications originating or received in the city.” Chicago Municipal Code § 3 — 75—030(A) (added October 1, 1997). Primeco Personal Communications, L.P., a wireless telecommunications retailer, and several other wireless telecommunications retailers (plaintiffs) filed an action for injunctive and declaratory relief. Plaintiffs noted that wireless telecommunications retailers do not own or operate equipment in the public rights-of-way. Plaintiffs claimed that the purpose of the Municipal IMF was to compensate municipalities for the use of the public rights-of-way. Plaintiffs argued that the Municipal IMF violated the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art. IX, § 2) to the extent that the Municipal IMF applied to telecommunications retailers who do not own or operate any equipment in the public rights-of-way. Defendants responded that the Municipal IMF was not a fee for the use of the public rights-of-way. Instead, the Municipal IMF was a tax imposed uniformly on telecommunications retailers. Defendants maintained that the Municipal IMF did not violate the uniformity clause. This court held section 20 of the Act (35 ILCS 635/20 (West 1998)) invalid as applied to telecommunications retailers who do not own, operate, or maintain any equipment in the public rights-of-way. Initially, this court noted that in a case involving a uniformity clause challenge it must ascertain the object or purpose of the taxing provision at issue. This court looked particularly to section 5 of the Act (35 ILCS 635/5 (West 1998)), entitled “Legislative intent,” to ascertain that purpose. This court reasoned that the Municipal IMF was intended as a tool to compensate municipalities for the use of the public rights-of-way. As such, the Municipal IMF violated the uniformity clause because the Municipal IMF was imposed on both landline telecommunications retailers, that is, retailers who own, operate and maintain equipment in the public rights-of-way, and wireless telecommunications retailers, that is, retailers who do not own, operate or maintain equipment in the public rights-of-way. In their petition for rehearing, defendants question this court’s conclusion that the Municipal IMF was intended as a uniform means of compensating municipalities for allowing telecommunications retailers to have access to the public rights-of-way. Defendants maintain that the Municipal IMF was intended as a means of raising revenue from telecommunication activities, and not just a way to compensate municipalities for the costs they incur in allowing telecommunications retailers to have access to the public rights-of-way. Defendants note that, pursuant to sections 20 and 25 of the Act (35 ILCS 635/20, 25 (West 1998)), municipalities may collect the Municipal IMF from wireless telecommunications retailers. See also 35 ILCS 635/10(b), (d), (f) (West 1998). Given the clarity of these provisions, and assuming the legislature knew that wireless telecommunications retailers do not own, operate or maintain equipment in the public rights-of-way, defendants assert this court gave undue precedence to the Act’s statement of legislative intent while ignoring the Act’s substantive provisions. Next, defendants assert that the Municipal IMF is a fair way of raising revenue from telecommunication activities. Defendants explain: “[Wlhile wireless retailers do not themselves need to install or repair equipment in public rights-of-way, they are critically dependent upon such equipment. Rather than place their own equipment in the public way wireless retailers have chosen to rely on landline carriers to do this for them. Thus, it is reasonable to spread to wireless carriers a portion of the compensation that municipalities receive for granting landlines access to public rights-of-way since wireless providers are critically dependent on the ability of landline carriers to obtain access to public rights-of-way in order to install and maintain equipment. For that reason, the General Assembly reasonably included wireless retailers within the class of telecommunications retailers that must compensate municipalities for granting landline carriers access to public rights-of-way Indeed, as we explain above, wireless retailers previously contributed to the payment of franchise fees for landlines. For that reason, they could also be expected to contribute to the IMF, which replaced franchise revenues.” Finally, defendants maintain this court’s opinion will have an adverse impact on “every municipal budget in Illinois” and will require “painful cuts in municipal services or borrowing at considerable cost to the taxpayers in order to plug budgetary shortfalls” resulting from the invalidation of the Act. I believe that defendants have advanced considerations that merit rehearing by this court. I also find an additional reason for allowing the petition for rehearing in this court’s failure to either follow or overrule our decision in City of Chicago Heights v. Public Service Co., 408 Ill. 310 (1951). This court’s attempt to distinguish City of Chicago Heights is unpersuasive. The decision in this cause is of momentous import to the litigants and to the people of this state. The City of Chicago and numerous municipalities in the state stand to lose a great deal of revenue because this court has invalidated the Municipal IMF. The municipalities will surely attempt to enact other taxing provisions to counter the loss of revenues from the Municipal IMF. Moreover, if the Municipal IMF is truly intended as a means to compensate municipalities for the use of the public rights-of-way, the legislature may well increase the fee that municipalities are allowed to collect from the land-line telecommunications retailers to make up for the loss of revenues from the wireless telecommunications retailers. Any increase in those fees would be passed on to users of landline telephones in this state. Given these circumstances and the arguments for rehearing outlined above, I believe this court errs in denying the petition for rehearing. I respectfully dissent. JUSTICE McMORROW joins in this dissent.