A new governor has been elected and soon after he takes the oath of office in January, he will learn that mathematics can be quite unkind.
The state of Illinois is teetering on the brink of a fiscal chasm.
No state is in worse shape than the Land of Lincoln. None.
J.B. Pritzker is about to learn that he can’t just walk into the kitchen of the Governor’s Mansion and microwave up some cash. Unfunded pension obligations are the main reason for Illinois’ fiscal ills.
A new legal theory is being pondered by outgoing state Rep. Jeanne Ives, R-Wheaton, that she contends would get the state out from under the pension debt.
It goes like this:
The state entered into illegal contracts when it signed up employees for pensions over the last 40 years. While the state constitution says pensions of public employees cannot be diminished, the constitution also mandates that state legislators pass a budget that they believe to be balanced and the constitution also says Illinois cannot take on more debt unless three-fifths of lawmakers agree.
And yet, Ives contends lawmakers have been well aware that the budgets they have passed each year have not adequately covered anticipated pension obligations. Her contention is that this was a deliberate violation of the balanced budget clause of the state constitution and thus its “contract” with pensioners is void. She also says that promising payouts without funding them creates a debt obligation that should have received a super-majority vote of the legislature each year, but didn’t always.
Longtime statehouse observer Charles Wheeler III is quick to note that the state constitution doesn’t require a balanced budget only that lawmakers estimate it to be balanced. The late great state budget director Steve Schnorf, who served under Governors Jim Edgar and George Ryan used to call the practice “playing make believe.”
I don’t see the Illinois Supreme Court having much of an appetite for taking up Ives’ legal argument. After all, the court unanimously ruled several years ago that the pension benefits cannot be reduced.
But if the case is somehow argued in the federal courts, this legal argument might prevail, especially with the conservative majority on the U.S. Supreme Court.
Now, you’ll hear government-worker unions and their advocates say: “Public employees paid their fair share while Illinois politicians shorted or skipped the employer contributions required by law, creating the nation’s largest pension debt.”
I’d agree with everything in that statement except the part about “fair share.” A more accurate phrase would be a “designated share.”
“Fair share” would imply retirees will get a return commensurate with the amount they invested. And that is just not so.
Take for instance former Homewood Flossmoor school superintendent Laura Murray, who now receives a $315,000 annual pension from the Illinois Teacher Retirement System after retiring at age 57. Wirepoints, an Illinois-based research policy group, estimated that she will receive $9.4 million in benefits during the remainder of her life.
How much did she pay in during her career to receive this benefit?– $314,000. She collected more in one year of retirement than she paid in during her entire career. Should we put the fiscal future of the state in jeopardy to make payments such as this? Those of us with 401-K accounts could never dream of that kind of return on our money.
And yet, the state may raise taxes on those anticipating far less generous retirements to pay for these obligations.
Now, some will say a promise is a promise and ought to be kept. In a perfect world, yes.
But it’s worth noting that courts routinely allow promises to be broken.
The most sacred promise many of us make is to wed “until death do us part.” And yet, half of all marriages end with a judge granting a divorce. That is the state saying a promise – even one as sacred as a wedding vow – can be broken.
But even routine business transactions can be voided by a judge. Anyone who has ever been owed something by a business or person who has gone bankrupt can attest to not receiving what they believed was owed to them.
With Republicans in a super minority status in the upcoming General Assembly, Ives says it may take lawsuits to make their policies heard.
Scott Reeder is a veteran statehouse journalist and a freelance reporter. Email him at Scott [email protected]