A legal cease fire between the Town of Normal and City of Bloomington on one side and McLean County government on the other shows signs of deterioration. A nearly two-year-old dispute is over shared sales tax money dedicated to behavioral health programs, jail expansion bond debt and public safety information systems. Just over a year ago, the two sides appeared headed for court. That now looks possible again.
In March, they agreed on a memorandum of understanding for an audit of expenditures from the county’s Mental Health and Public Safety Fund and approved a good faith gesture to temporarily suspend transfers of new shared revenue to county control. That memorandum came eight months after the initial agreement to do the audit.
The underlying issue is the city and town believe the county is getting too much sales tax money — more than the city and town thought they would ever pay. The county has maintained it is spending the revenue according to the decade old intergovernmental agreement. The city and town disagree with the county on the amount and nature of some of the spending.
In August audit results came back, and the governmental bodies said it offered a basis for continuing discussions. Those talks have not happened, according to various elected officials and staff. The fact the city and town have now hired an outside law firm to handle the matter and a letter WGLT acquired under the Freedom of Information Act suggest why.
“The County’s wrongful conduct has deprived — and continues to deprive — the City and the Town of the basic benefit of their bargain,” said Hart Passman, an attorney with Elrod Friedman, LLP in the Sept. 1 letter.
Elrod Friedman is headquartered in the South Lawndale neighborhood of Chicago. It specializes in “local governments and private developers in land use and government law,” according to the firm’s website.
The missive renewed the confrontational language and the city and town claims in letters of a year ago that the county “violated the letter and spirit of the IGA.”
“The county’s continued refusal to spend the Pledged Revenues or negotiate in good faith are egregious abuses of discretion that frustrate the basic purpose of the IGA [intergovernmental agreement] and deprive the city and Town of any meaningful value from it. These abuses have unjustly enriched the County to the detriment and injury of the City and the Town,” said Passman.
The letter claimed both that there is a “considerable funding glut” caused by not spending the money and that a “wrongful diversion of interest prevents the Mental Health and Public Safety Fund from organically growing over time.”
“The County has diverted nearly $1 million per year in interest generated by the Pledged Revenues into separate accounts,” said Passman.
The county has used interest generated from short-term investment of the unspent amounts in its general fund. The county has asked the Illinois Attorney General to clarify which of two state laws should apply to how the county should handle the interest income.
The letter also renewed claims that spending on salaries for some jail guards do not qualify under the IGA and that some of the spending on information systems for units within the county should not come from shared revenue.
“The County’s stockpile of unspent Pledged Revenues of approximately $20 million, and this abuse of discretion is in breach of the requirements of the IGA,” said Passman.
The city and town issued a deadline of mid-October for the county to “commence substantial steps to comply with the IGA,” and cure the breaches.
“Although we prefer to avoid a lawsuit, the County’s failure to recognize the seriousness of its shortcomings and my clients’ resolve may leave no other option,” said Passman.
