Local lawmakers pondered what to write on the drawing board that the General Assembly must return to with the Illinois Supreme Court’s overturning of the 2013 pension reform law.
In a unanimous Friday decision, the seven justices threw out the law that sought to lower benefits for existing and future state government retirees as blatantly violating the Illinois Constitution clause that prevents pension benefits from being “diminished or impaired.” They also all but scoffed at the state’s argument that its sovereign “police power” to take emergency action in times of crisis allows it to override the constitutional provision.
For the McHenry County lawmakers who voted against the bill on the grounds that the courts would reject it, they took a moment to say “I told you so” before addressing how to fix a dire problem that now accounts for more than 20 percent of state spending, from finding alternatives that would pass legal muster to asking voters to amend the Illinois Constitution to change the protection provision.
“To me, the [Illinois] Constitution is very clear, and our Supreme Court ruled on this very clearly in the past,” said state Rep. Mike Tryon, R-Crystal Lake, who was among the more vocal Republican voices arguing that the law was unconstitutional.
Tryon, along with Reps. Jack Franks, D-Marengo, David McSweeney, R-Barrington Hills, and Sen. Dan Duffy, R-Lake Barrington, voted against the reform bill in 2013, while Reps. Barbara Wheeler, R-Crystal Lake, and Sens. Karen McConnaughay, R-St. Charles, and Pam Althoff, R-McHenry, voted yes.
Friday’s decision was not a surprise to McConnaughay, who said that previous court rulings in the lawsuits brought by the state’s public-sector unions pointed to an ultimate rejection. But the issue at hand is now how to fix the worst-funded pension system of all 50 states, with an unfunded liability of at least $110 billion and climbing.
“It’s unfortunate that we’re back to square one again at a time we can ill afford it. Without even considering this, we’re $6 billion in the budget hole for 2016,” McConnaughay said.
But Duffy, who thought the 2013 bill was not only unconstitutional but unfair to retired workers and those on the cusp of retirement, said there now is opportunity for meaningful change. He echoed Gov. Bruce Rauner’s statement calling for a constitutional amendment clarifying the difference between benefits already earned and future benefits not yet earned that can be modified.
“This gives us the opportunity to look at some real pension reform our state is in real need of,” Duffy said.
The rejected law affected four of the five state-run pension systems for teachers, state lawmakers, university professors and rank-and-file state employees. Lawmakers excluded the pension system for judges in an obvious political move to improve the bill’s odds of surviving a legal challenge.
Writing for the court, Republican Justice Lloyd Karmeier called the crisis one “for which the General Assembly itself is largely responsible,” citing many decades of lawmakers underfunding the system or in some years skipping the payments altogether. The 38-page opinion also rejects the idea that the state can reject constitutional provisions in a crisis.
“There simply is no police power to disregard the express provisions of the constitution. It could not be otherwise, for if police powers could be invoked to nullify express constitutional rights and protections whenever the legislature (or other branches of government) felt that economic or other exigencies warranted, it is not merely pension benefits of public employees that would be in jeopardy. No rights or property would be safe from the State,” Karmeier wrote.
The ruling also dismissed the state’s argument that it exhausted other options. Karmeier specifically singled out the unpopular 2011 tax increase – 67 percent on individuals and 46 percent on businesses – that lawmakers allowed to substantially expire Jan. 1. While billed by Democratic lawmakers as a way for Illinois to get its fiscal house in order, almost all of the new revenue was swallowed by ballooning pension obligations.
Local lawmakers bluntly said that raising the income tax is a non-starter.
“That is not an option. The people of the state are overtaxed,” McSweeney said.
Franks said it is imperative for lawmakers to first sit down with retired judges and Supreme Court justices to determine what fixes will be constitutional. He had pressed then-Gov. Pat Quinn and House Speaker Michael Madigan in the run-up to the 2013 law to hold a Committee of the Whole to do just that, without success.
But Franks and other lawmakers said that Friday’s ruling may have destroyed a number of possible other fixes.
“By passing something we know is not going to pass [a legal challenge], it’s going to put us in a worse position,” Franks said.
• You can read the Illinois Supreme Court opinion striking down the pension reform bill at http://shawurl.com/1w6x.