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Monday, March 18, 2024

Appellate Court Declines to Decide Challenge to Ballot Proposal

State law requires home rule municipalities to obtain voter approval before they can impose or increase a real estate transfer tax. In November 2023, the Chicago City Council passed a resolution to place a referendum on the March 2024 ballot to modify the City's real estate transfer tax. The ballot question proposed to decrease real estate transfer taxes for properties sold for less than $1,000,000 and increase transfer taxes for properties sold for more than $1,000,000.

A collection of local business and real estate organizations challenged the proposed ballot question, arguing the proposal violated state statute and the Illinois Constitution. Plaintiffs argued that state statute only allows the imposition of a new transfer tax or increase in the rate of taxation with approval by referendum, and that any other change (such as a tax decrease) has to be done without prior approval by referendum.

The trial court ruled in favor of the local businesses and prohibited the proposal from being on the ballot. On appeal, the Appellate Court reversed the trial court in Building Owners and Managers Association v. Commission of the Board of Elections,

First, the Appellate Court noted that Illinois courts have declined to exercise jurisdiction over challenges to referenda that are part of the legislative process. The rationale is the separation of powers between the judiciary and the legislative branches of government, and that the judiciary can "neither dictate nor enjoin the passage of legislation." Here, the referendum was the first step in a process to authorize a municipality to adopt an ordinance implementing or modifying the tax, a legislative process that the AppellateCourt held that courts should not interfere with.

Second, the Appellate Court stated it would not issue an advisory opinion, and that courts should only decide the validity of legislation that has already been enacted.

The Appellate Court vacated the judgment of the trial court, finding that the trial court should not have exercised jurisdiction over the complaint.

Post Authored by Alexis Carter & Julie Tappendorf, Ancel Glink


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