In response to city council candidate William “Bill” Dettmers’ lawsuit alleging misappropriation of funds, the City of Wood River argues that using sales taxes to fund a new recreation center could be characterized as property tax relief and municipal operations.
“The duly elected legislative leaders of the City of Wood River have determined that it is appropriate in the performance of their municipal operations to build and operate a recreation center for the benefit of their residents,” wrote attorney James Schrempf in a motion to dismiss filed March 9.
Dettmers filed the complaint seeking declaratory judgment and injunctive relief on March 18, 2022, through attorney Eugene Hanses Jr. of Guin Mundorf LLC in Collinsville.
Dettmers seeks declaratory and injunctive relief in his complaint, “arising from the unlawful plan of Defendant City to improperly and illegally use and misappropriate certain ‘Sales Taxes’ to build a ‘Recreation Center’ in violation of express prohibitions set forth in the Illinois Municipal Code and express limitations established by both the referendum and its authorizing ordinances under which the “Sales Taxes’ have been imposed.”
“Tax revenues, upon their collection, become public funds of which the taxpayers are the equitable owners, and a taxpayer has the equitable right to restrain the illegal use or misappropriation of public funds in which the taxpayer, in common with other taxpayers, has an interest,” the suit states.
Specifically, Dettmers alleges the Illinois Municipal Code allows corporate authorities of a non-home rule municipality to impose a “Non-Home Rule Municipal Retailers’ Occupation Tax” and a “Non-Home Rule Municipal Service Occupation Tax.” Those sales taxes may be used for public infrastructure, property tax relief, and municipal operations, the suit states.
Dettmers claims Wood River passed Ordinance No. 2597 on Dec. 19, 2018, imposing a 1 percent sales tax intended for property tax relief, public infrastructure and municipal operations.
Wood River voters approved the proposition on April 2, 2019.
On April 15, 2019, Wood River passed Ordinance No. 2619 ordaining the imposed sales tax, which was later amended on Oct. 21, 2019 with Ordinance No. 2646. Under the amended ordinance, the sales taxes could be extended to capital improvements, according to the lawsuit.
“It is the intent of the City of Wood River that the revenue generated by the passing of this ordinance and any amendment thereto shall be utilized by the City of Wood River to finance capital projects, including but not limited to capital improvement projects within the City of Wood River,” it states. “The Finance Director is hereby directed to create a fund entitled ‘Non-Home Rule Sales Tax Fund’ and to prepare a report at least annually verifying purpose and the receipt of said funds and verifying all expenditures of said funds.”
Dettmers claims the Illinois Municipal Code does not reference that the sales taxes could be used for “capital projects,” nor that “capital projects” are included under the umbrella of public infrastructure.
“The phrases ‘capital projects’ and ‘capital improvement projects’ did not appear in any proposal presented to the voters of the City of Wood River, nor were the phrases ‘capital projects’ or ‘capital improvement projects’ contained in any ordinance of the City of Wood River relating to the sales taxes, until first appearing in Section 6 of Ordinance No. 2646,” the suit states.
Dettmers alleges Wood River publicly indicated that funds from the sales tax would go towards construction of a recreation center, which it allegedly claimed fell under the public infrastructure category within the Illinois Municipal Code.
“[A] recreation center is not ‘municipal roads and streets, access roads, bridges, and sidewalks; waste disposal systems; and water and sewer line extensions, water distribution and purification facilities, storm water drainage and retention facilities, and sewage treatment facilities,’” the suit states.
Dettmers further argues that the city has failed to disclose a comprehensive funding package for the recreation center.
Dettmers claims the city enacted Ordinance No. 2646 in an attempt to misappropriate sales taxes and justify their use for the construction of the recreation center.
“Plaintiff Dettmers has a legally tangible and cognizable interest in ensuring that any and all Sales Taxes properly received by City are spent by the City only in strict compliance with the limitations established under the Municipal Code,” the suit states.
Wood River responded with a motion to dismiss and for summary judgment.
“Plaintiff’s complaint focuses entirely on whether the building of a recreational center by the City of Wood River constitutes ‘public infrastructure’ as the term is defined by the municipal code,” the motion states.
Wood River concedes in its motion that building the recreation center would not be considered public infrastructure.
The city instead argues that the building and maintenance of a recreation center is authorized by the Illinois Municipal Code under the property tax relief and municipal operations categories.
“There are a number of revenue sources that could be utilized to pay for the building of a municipal recreation center,” the motion states.
“Certainly, real estate property tax of a municipality could be expended for construction and maintenance of a municipal recreation,” it continues.
Wood River claims it plans to use sales tax revenues rather than increasing property taxes in order to pay for the recreation center.
“By so doing, the city is providing property tax relief from potential property tax increases,” the motion states.
“Likewise, the term ‘municipal operations’ is certainly broad enough to encompass operation of parks and park improvements to enhance the recreational opportunities of residents,” it continues.
The city also argues that Ordinance No. 2646 was repealed and has no effect.
Wood River had previously filed its motion as a motion for summary judgment.
“Plaintiff’s response brought to the attention of the defendant, a misnomer as to the title of the motion in that it actually was a motion to dismiss and not a motion for summary judgment,” Schrempf wrote.
The defendant asked to withdraw its previous motion. Madison County Associate Judge Ron Foster granted the motion to withdraw on March 14.
Foster scheduled a motion hearing for May 12 at 9 a.m.