Reparations Committee argues about legal funding streams

Even a city in full support of reparations can run into trouble trying to find legal ways to fund that effort. That was the lesson from June’s Reparations Committee meeting Thursday, June 2, which ended with an array of understandable emotions on display.

The meat of the meeting concerned alternative methods to fund the reparation pool of money, which was set to be funded with a user tax on recreational cannabis. But not enough money has come in to keep up with the number of applicants eligible for the first round of grants. 

Therefore, at last month’s meeting, members directed City Attorney Nicholas Cummings to investigate other revenue and tax sources to increase the current reparations fund by $2.6 million. They suggested Cummings look particularly at the city’s general fund, which has a surplus of $20 million, and the city’s real estate transfer tax.

Cummings’ verdict? He said he did not advise the committee to use general funds because the there is a possibility that it could open up the pool of the people who could challenge the program in court. The money from a general fund is designated for all taxpaying citizens and therefore if used for reparations, it could be argued it violates the Equal Protection Clause of the U.S. Constitution, he said.

Yet, he said, the choice belongs to the City Council. “If the council wants to do that, that is certainly fine,” Cummings said. “But it’s my job to advise [on] whatever comes next.”

Cummings’ explanation

The city attorney clarified that not all cannabis revenue in Evanston goes to the reparations fund, only the revenue the state allows the city to collect from recreational-use marijuana.

He also explained the two types of spending in the city budget process: mandatory and discretionary.

• Mandatory spending, which includes the general fund, refers to activity traditionally associated with government operations.
• Discretionary spending, which is subject to review by the City Council each year and is labeled “Other Funds/Special Revenue Funds” in Evanston’s current budget.

“Mandatory spending is meant for city operations that benefit the general welfare and public. [To use these funds] opens up the net for for those that can claim discrimination on the basis of equal protection, as an Evanston resident who is expected to receive the benefit of certain dollars,” Cummings said.

He added: “If those dollars are taken away to give direct cash payment, for example, to Black residents, there is the possibility that that person has standing to challenge the programs.”

Cummings said the tax-increment financing (TIF) district in the Fifth Ward and the American Rescue Plan Act funds that have been coming from the federal government can only be used to address inequities in a race-neutral way for the same reason. 

He suggested using the funds in a race-neutral way, but targeting other areas.

“That does not mean that the City Council can’t use funds from the general fund, it’s that I would not recommend that.”​​ Cummings said. However, he said he did not see any problem with using the real estate transfer tax.

Members push back

But several committee members disagreed with the recommendations and there was a brief albeit passionate discussion in Room G300 of the Morton Civic Center once Cummings finished. 

Eighth Ward Council Member Devon Reid, Fifth Ward Council Member Bobby Burns and longtime community leader Carlis Sutton all challenged Cummings.

“I caution us to try to frame this in a way that those who disagree with our counsel … not trusting him, but people get things wrong all the time,” Burns said. “That’s why we consult with outside counsel from time-to-time to get other opinions.

“I have not seen anything that suggests that we would lose [in court], we might open it up to more people that have standing, but we won’t lose …”

Committee Chair Peter Braithwaite, the Council Member for the Second Ward, recommended committee members accept Cummings’ advice to maintain a “bulletproof” legal basis for the reparation program

Sutton told the attorney, “The City of Evanston has voted to support a program called reparations … discretionary funds are insufficient to implement this program. Why could you not, as an attorney, investigate other means like surplus income to invest in the committee” so the council could keep the commitment made to the several hundred applicants of the restorative housing program? 

Burns said while he appreciated Cummings’ counsel, he believes a gradual tax would not help fast enough and the committee should consider a speedier solution. “The way to do that is to not wait on the cannabis use tax but to use surplus from our general fund in order to provide the amount of funding we need so that we can expedite funding to the beneficiaries,” he said.

He asked again for clarification from Cummings about how using general funds might play out. “The reality of the question is, does it make us less likely to lose in court?” 

Cummings said the court may determine that the city violated equal protection by taking money away from the general welfare and spending a “suspect class.”

Simmons and Braithwaite both stood firmly on the side of keeping the program as unshakeable as possible by not pursuing any revenue streams that could make the city’s program vulnerable to drawn out litigation.

“I really look to Nick for direction on how we can have a legal framework that is viable, and not these programs that are aspirational,” Simmons said. “If we’re saying we want general funds, and he’s saying he doesn’t advise it … he’s the one who has to defend us in court, if we get to that point.”

Simmons said she supported Cummings’ advice while he continues to explore other state and federal options. She also requested that the committee formally invite outside institutions to help the city in its work to achieve repair.

The meeting ended with the two sides not finding a solution and a brief public comment period. The next Reparations Committee meeting will be July 7.

This story has updated to correct quotations from Fifth Ward Council Member Bobby Burns.