The Peoples Gas Light and Coke Company, et al., Appellants, v. The City of Chicago, et al., Appellees.

Docket No. 34065—Agenda 16—May, 1956.

On September 25, 1956 the Supreme Court of the State of Illinois handed down a decision in the above captioned matter holding constitutional the municipal utility tax, which decision we feel will be of considerable interest to all municipalities.

As you know the 1956 legislature enacted a provision authorizing municipalities to tax all public utilities at a rate not to exceed 5% of the gross receipts from such business originating within the corporate limits and further provided that this tax could be passed on to the consumer by the utility and a notation thereof placed upon the bill.

Peoples Gas Light and Coke Company of Chicago sought an injunction to restrain the enforcement of the ordinances passed by the City of Chicago under this legislation. The Chicago ordinances imposed a tax of 5% on electricity, 5% on gas and 2% on messages transmitted by electricity. In the electric ordinance a credit of 4% was given due to the fact that the electric company is presently paying the City of Chicago 4% of the gross under its franchise ordinance, but no credit was given the gas company as they pay nothing under their franchise. The tax of Illinois Bell was placed at 2% as they are presently paying a 3% tax under their ordinance.

The principal objections of the gas company were that the tax was not uniform as to class in violation of Section 1 of Article IX of the Illinois Constitution, and that the ordinances resulted in impairment of the existing contracts (franchise ordinances).

The Court held that the tax was uniform, that it did not impair the existing contracts and under the legislation was within the power of the City of Chicago to levy and collect.

While all of the possible constitutional questions may not have been raised by this particular case, it is our feeling, based primarily on this decision, that the utility tax is constitutional.

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