MARION — A judge in Williamson County on Jan. 14 ordered Herrin School District No. 4 to put $2.7 million back into its capital projects fund after it misused sales tax money that under state law had to be earmarked for facilities projects.
The judgment is the result of a lawsuit filed in 2010 by attorney Ron Osman, of Marion, who said he filed on his own behalf as a taxpayer.
The Illinois General Assembly passed the Illinois County School Facility Occupation Tax Law in 2007, which allows a county to impose a sales tax of up to 1% upon all retail business to provide revenue to be used exclusively for school facility purposes.
Williamson County residents voted to pass the tax, which went into effect July 1, 2008. Osman’s lawsuit alleged the school district had inappropriately used these tax funds from Oct. 1, 2008 to Aug 22, 2011. Osman said after the tax was passed, the school board said it planned to use the funds to pay down bond debt and reduce other parts of the district’s tax levy.
“I notified them early on that that was inappropriate,” Osman told The Southern. But, he said, the board made the move anyway.
Terry Ryker, superintendent of Herrin School District, said the district was doing what it believed at the time to be within the law. He said the board believed the funds could be used to pay down old bond debt, which then made it possible to reduce property taxes to residents of the district.
After filing his suit, Osman said, a circuit judge was clear in his read of what the district had done.
“The judge agreed 100% with me — it was plain language they had to repay the money,” Osman said. Still, he added that the district appealed the decision.
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After the appeal was denied and the lower court’s ruling upheld, a news release from Osman’s office sent Jan. 26 said the court entered a $2,729,625.10 judgement against Herrin School District for improper usage of funds received under the Illinois County School Facility Occupation Tax Law.
Ryker said he has heard rumors online that suggest the district is going to raise taxes to cover replacing the funds that had to be moved.
“We’re not going to do that to the people in the community,” Ryker said. He added that the district anticipated this judgement coming, so it deferred some projects that have saved money and cushioned the sting of last month’s decision by the court.
Osman’s release said the district will have to take the $2.7 million from its other funds and put it back into its capital projects fund. Osman said the transfer had not been made as of Monday. Ryker said the board will begin discussing the funds transfer at its February meeting with a final vote coming after. He said the board is not dragging its feet, but following protocol, which can take time.
Though the school board still has to move the $2.7 million to its project fund, Ryker said the law was modified in 2011 to allow the money raised through the sales tax to be used for bond payments. The school district is now legally using money raised from the tax to make bond payments.
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