Local Government: Reporting of Referendum Information Expenses
July 17, 2009
On May 22, 2009, the Illinois Appellate Court issued a surprising decision that could alter the manner and process by which units of local government provide information about a question of public policy that is put to a referendum. In Citizens Organized to Save the Tax Cap v. State Board of Elections, No. 1-07-2389 (1st Dist. May 22, 2009), the court concluded that newsletters distributed to voters by Northfield School District 225 regarding a bond issue for $94 million in capital improvements and bond refunding were “electioneering communications” under the Illinois Election Code – even if the materials were purely factual. As a result, the court concluded that because the District spent more than the Election Code’s $3,000 minimum, the District should have registered as a “local political committee” and filed organization and disclosure statements required under the Election Code.
Many local governments are familiar with the “election interference” provisions in Section 9-25.1 of the Election Code. Under these provisions, a local government may spend public funds to provide factual information about a public policy question on the ballot and encourage voters to vote on the question, as long as the material does not advocate a vote for or against the question. It has been generally believed that if a local government remains neutral (as provided in the election interference provisions), it is not required to register as a “local political committee” under other provisions of the Election Code. As a result, this new case is a surprise to many long-time observers of election law.
School District 225 has filed a Petition for Rehearing in the Appellate Court to demonstrate to the court that the General Assembly did not intend to require local governments and school districts to comply with these political committee registration and disclosure requirements, so long as they remain neutral on the question at issue. If the Appellate Court’s decision is upheld, not only would governmental units need to monitor direct and indirect expenses (e.g., value of employee services, use of computer equipment, etc.), but the liability for non-compliance could fall upon the individual officials.
We will monitor the case and keep you advised. In the interim, if you are contemplating a referendum in the near future, please feel free to contact Barbara Adams at 312-578-6563, e-mail barbara.adams@hklaw.com or the Holland & Knight attorney with whom you normally work, for further guidance on this issue.
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