October 26, 2000, dawned pretty much like every other day here in Rockford, Illinois. After ten years of living under the dictatorship of a federal magistrate, we had decided that nothing would ever change. And then something did.

On that glorious Indian summer morning, the Illinois Supreme Court, by a vote of six to one, declared illegal the Rockford School Board’s use of the school district’s tort fund to pay for “remedies” in the Rockford school-desegregation case, known as People Who Care. Under the Illinois Local Government Employees Tort Immunity Act, a local governmental body can levy taxes “to pay any tort judgment or settlement for compensator,’ damages for which . . . it is liable . . . ” Since 1991, Rockford’s District 205 has raised almost $134 million in tort taxes (and has spent close to a quarter-billion dollars on the desegregation case). The money, however, was not distributed to the plaintiffs in the class-action lawsuit. Instead, it has been spent on a series of federal-court-ordered programs designed to narrow the achievement gap between white and minority (defined by the court as black and Hispanic) students, and to desegregate District 205 through busing and magnet schools. As a result, Rockford has the third-highest property tax rate in the nation and the most desegregated schools (as you long as you define “desegregation” as “racial quotas” rather than as allowing all students to attend their neighborhood schools). Meanwhile, both white and minority students perform worse on standardized tests than their counterparts did ten years ago.

It took eight years for the tax-protest case to make its way up through the courts. In October 1992, Michael O’Brien, a local attorney and self-described liberal Democrat, filed the first objection to the tort tax in Winnebago County Circuit Court. Two years later, Rockford Educating All Children, a citizens’ group formed in response to the People Who Care suit, joined with O’Brien to collect tax-protest forms from District 205 taxpayers. Since then, as many as 16,000 property owners have filed protests each year. Fighting this case pro bono, O’Brien estimates that he has spent over 3,000 hours on the tax protest.

O’Brien’s case has taken a few twists and turns over the years, including a visit to federal court. (The Seventh Circuit Court of Appeals ultimately sent the case back to the state courts, since the Tort Immunity Act is an Illinois, not a federal, law.) But his argument has remained consistent: The Rockford School Board’s use of the tort tax in this manner amounts to taxation without representation. While the federal court can order the school district to implement programs to redress constitutional violations, it cannot order the method of funding those programs. Under Illinois law, the question of funding is left up to the voters, not the school board or the court.

The Rockford desegregation case has been driven by the greed of a Chicago lawyer who took a limited case, aimed at keeping a high school open on the west side of town, and turned it into a federal class-action lawsuit. O’Brien’s case, on the other hand, has its roots in the school board’s response to People Who Care. The idea to use the tort fund to pay for desegregation originated with the school board’s own lawyers, who convinced the board that they could expand the district’s budget by admitting guilt in the desegregation case. The same board members whose actions led to the desegregation lawsuit arrogated to themselves the authority to override the people’s will and to raise their taxes without their consent. As Mike O’Brien argued in a presentation at the Heritage Foundation in 1996, the very existence of judicial taxation made the board’s use of the tort fund almost inevitable:

Not only does the court circumvent the electorate by evading the referendum process. . . It undermines the only protection the process offers, the adversary system, by making clear to the governmental entity that it will be better off guilty. A guilty verdict [e]nsures that the judge will increase the governmental unit’s operating revenues and budgets. . . . a Rockford School Board member has asked . . . how the District will survive financially if it is ever unfortunate enough to achieve so-called unitary status [the legal term for the end of a desegregation suit and the return of schools to local control]. At that point the tort injury will have come to an end, but the dependency upon the judicial taxation will persist.

As O’Brien’s case played itself out in the courts, a related battle was taking place in the political arena. Over the years, the composition of the Rockford School Board changed, and new board members objected to judicial taxation. But by that time, Magistrate P. Michael Mahoney had issued the Comprehensive Remedial Order (CRO), an elaborate social-engineering scheme designed to balance Rockford’s schools racially through a $48-million building program, magnet schools, and direct court oversight of every aspect of District 205’s operations. The magistrate also expressly ordered the board to use the tort levy to fund the CRO and threatened the members with jail time if they refused. Under protest, they agreed.

In February 1997, The Rockford Institute held the first of two informational rallies to address the issue of judicial taxation. On a bitterly cold and snowy Monday night, over 700 people packed the auditorium at the Rockford Woman’s Club to hear Chronicles‘ editor Thomas Fleming and Rockford Congressman Don Manzullo explain the problems with judicial taxation. In the audience that night were Ted Biondo and Patti Delugas, both of whom would be elected to the school board the following November, largely because they vowed to end the use of the tort fund and fight judicial taxation. In February 1998, they, along with board member David Strommer, Mike O’Brien, and Chronicles‘ legal-affairs editor Stephen Presser joined Dr. Fleming and Representative Manzullo on the same stage, pledging never to give up the fight against judicial taxation.

In December 1998, the board members took their strongest stand ever by refusing to approve a tort-tax levy. Instead, they placed on the April 1999 ballot a referendum which would have replaced half of the tort tax—about $12 million—with a tax increase in the school district’s general fund. The rest of the money would be made up through budget cuts in non-court-ordered programs. Board members could not offer any guarantee that, if the voters passed the referendum, the board wouldn’t also levy a tort tax—perhaps under orders from the federal judge. Not surprisingly, the referendum was defeated two to one, at which point Biondo, fearing bankruptcy for the school district, switched sides, asking the federal magistrate to lift the Illinois deadline on tax levies so that he could switch his vote on the tort fund. (It was later revealed that, even before the referendum was defeated, the school board had privately instructed its lawyers to ask the magistrate to order the use of the tort fund should the referendum fail.)

In December 1999, Patti Delugas joined Ted Biondo in voting for the tort tax levy. Both claimed publicly that they had no other option and denied that they had ever believed that the use of the tort fund was illegal. They also argued that the magistrate had never actually imposed judicial taxation, since the board members had always voted for the tort tax (even if they had done so under protest), and the magistrate had never invoked Missouri v. Jenkins, the 1990 U.S. Supreme Court ruling which has become the basis for federal judicial taxation, particularly in desegregation eases.

The prevarications of Biondo and Delugas confirmed another observation that Mike O’Brien had made at the Heritage Foundation in 1996:

[B]ecause judicial taxes almost inevitably co-opt the local government and neutralize its adversarial resolve, they also tend to obscure precisely who is responsible for the taxes. Has the court ordered the taxes, or has the legislative body voluntarily voted for them because of concern for what the judge might do if the vote went the other way? . . . This judicial sleight of hand has been a major theme in Rockford . . . The simple truth is that local officials do not, indeed cannot, govern in the face of judicial taxation; They become more dependents of the federal court’s largess than the democratic representatives of their constituency.

The defections of Biondo and Delugas meant that, for the first time in five years, the board had a pro-tort majority. The only hope for ending judicial taxation lay with the Illinois Supreme Court. When the dust had settled, Justice Michael Bilandic, a former Democratic mayor of Chicago, wrote the opinion for the majority, which upheld Mike O’Brien’s objections to the tort-tax levy.

The decision was a model of judicial restraint and strict construction. The plain language of the Tort Immunity Act must be followed. Justice Bilandic argued; “compensatory damages” means a “monetary award paid to a person as compensation for loss or injury.” Magistrate Mahoney’s orders in People Who Care:

clearly involve mandatory injunctive relief and not compensatory damages. . . Consequently, the Tort Immunity Act does not authorize the levying of taxes to fund desegregation remedies and to pay the debt service on general obligation bonds.

Longtime readers of Chronicles know that we have devoted more than a little ink to the Rockford school desegregation ease these past four years. We may never have fully explained, however, why we believe it to be so important to the 99 percent of our readers who live somewhere else. Rockford, a demographic microcosm of the country at large, has long been viewed as an ideal test market for both big business and big government. On October 26, 2000, the nation dodged a bullet, yet the Illinois Supreme Court decision didn’t even make national news. But what might have happened if the court had gone the other way?

Look at the list of those who filed amicus curiae briefs supporting a broad use of the tort fund: the Illinois Association of School Boards, the Illinois Association of School Administrators, the Chicago Board of Education, the Chicago Lawyers’ Committee for Civil Rights Under Law, Inc., the Mexican American Legal Defense and Educational Fund, and the American Civil Liberties Union of Illinois. If the Illinois Supreme Court had ruled in favor of these “friends of the court,” local governmental bodies throughout Illinois—and before long, throughout the country—would have been deluged with lawsuits. As Mike O’Brien wrote in 1996:

[I]f the tax levy provision of our state Tort Immunity Act is interpreted expansively to mean that. . . it can be used to fund . . . ongoing programs of court ordered spending in excess of state tax levy limits, then private litigants can circumvent the democratic process and transfer basic fiscal power and control away from our elected representatives and into our courts. . .

Some governmental bodies, facing a budget crunch, might even have invited litigation and then pled guilty so that they could open the floodgates of judicial taxation.

Despite the Illinois Supreme Court’s ruling, the federal desegregation suit continues, and the magistrate has made it clear that he won’t even consider returning the district to local control until at least 2006. Meanwhile, the specter of full-fledged federal judicial taxation looms on the horizon. If the school board can’t present the federal court with a plan to fund the CRO, Magistrate Mahoney may issue a Missouri v. Jenkins order, raising our property taxes back up to where they were before the Illinois Supreme Court’s ruling. He may be reluctant to do so, because the school board could appeal the case all the way up to the U.S. Supreme Court, which no longer appears to have a majority that favors either judicial taxation or racial quotas in desegregation. But if the magistrate can convince the board to ask him to issue the Jenkins order, then some legal experts believe that the school district could not appeal—and Michael O’Brien might not be able to, either. Already, Ted Biondo and Patti Delugas have indicated that they might vote for a Jenkins order, arguing that “We need to keep our options open” (read: “We need to keep the money flowing”).

The fat lady may have sung in October, but the 800-pound gorilla is standing in the wings, waiting for his encore.