Illinois Governor Bruce Rauner (R) has yet another challenge on his hands when it comes to righting the state’s precarious financial situation. As is so often the case in the Land of Lincoln, the problem is their bloated, underfunded public workers union pension system. The programs are facing billions of dollars in shortfalls with no relief in sight, and a recent effort to remedy the situation just went down in flames. A 2013 law which sought to reform the system by eliminating automatic increases, reducing future benefits and generally curbing the growth of the debt has been rejected by the state’s Supreme Court. (From the Chicago Tribune)
The Illinois Supreme Court on Friday unanimously ruled unconstitutional a landmark state pension law that aimed to scale back government worker benefits to erase a massive $105 billion retirement system debt, sending lawmakers and the new governor back to the negotiating table to try to solve the pressing financial issue.
The ruling also reverberated at City Hall, imperiling a similar law Mayor Rahm Emanuel pushed through to shore up two of the four city worker retirement funds and making it more difficult for him to find fixes for police, fire and teacher pension funds that are short billions of dollars.
At issue was a December 2013 state law signed by then-Democratic Gov. Pat Quinn that stopped automatic, compounded yearly cost-of-living increases for retirees, extended retirement ages for current state workers and limited the amount of salary used to calculate pension benefits…
The major culprit here is one which regular readers should already be familiar with. There is a 1970 provision in the state constitution – put in place through the efforts of union supporters – which essentially makes union pensions a constitutional right and forbids the legislature from ever touching them once they are put in place. This has allowed the unions to get up to all sorts of hijinks and forced the courts to back them up. While examples are plentiful, one of the worst was when a union lobbyist was able to work just one day as a substitute teacher and then sue the government for a lifetime pension. No matter how obvious the indecency and corruption in such a scenario, the union boss’s attorney was able to go into court, cite the constitutional provision, and claim that since the pension had been assigned to the “teacher” once it could never be removed or reduced in amount.
This is one of the platform items that Rauner ran on during his campaign. When this decision was handed down, the Governor took the opportunity to renew the call for reform.
Rauner, who argued during last year’s campaign that the law was unconstitutional and didn’t go far enough to reduce the pension debt, said the court ruling only reinforces his approach of getting voters to approve a constitutional amendment that “would allow the state to move forward on common-sense pension reforms.”
The governor has proposed allowing veteran state workers to keep the current benefits they’ve earned through a certain date, then move them into a lower-paying benefit plan created for newer state workers. To try to make that approach pass legal muster, he wants lawmakers to put on the ballot a proposed constitutional amendment to clarify that future retirement benefits could be changed.
Not only will the Governor face some tough sledding against the powerful state Democrat machine in seeking such an amendment, he will find few friends in the courts as well. If you click through to the Trib article and read the court decision, the justices are not throwing up their hands and showing any sense of exasperation with the amendment. To the contrary, they are lecturing the legislature on the importance of honoring the state’s debts once they have been promised and essentially saying, the economy gets better or worse at times. You should have planned ahead.
That’s a wonderful sentiment if you’re a union lawyer, but it’s been a long time since their economy has done much in the getting better department. The total amount of red ink for the state is now over $100B. The only answer that the Democrats have is to jack up their taxes even further (what else?) at a time when they are already driving businesses and workers out of the state. Bruce Rauner has his hands full and I don’t envy him the battle ahead. This state may be too far gone to save.