Republican Bruce Rauner has his work cut out rehabilitating Illinois from years of liberal-public union misrule, but now he may also have to cope with a willful state judiciary. Consider a lower court judge’s slipshod ruling last week striking down de minimis pension reforms.
The fiscally delinquent state has accrued a $111 billion unfunded pension liability—a 75% increase from five years ago—in addition to $56 billion in debt for retiree health benefits. Incredibly, the state is spending more of its general fund on pensions than on K-12 education. One in four tax dollars pays for retirement benefits. Last year the state had to defer $7 billion in bills to contractors. This is after Democrats in 2011 raised income and corporate taxes by 67% and 30%, respectively. Little wonder that Illinois has the nation’s worst credit rating.
They could be twins, couldn’t they? And Chicago has a hell of an art museum if they need to sell off a few Old Masters to pay for the golden decades of a few SEIU purple-shirted, pinkie-ringed thugs.
Give Illinois credit (albeit CCC- credit) for trying to trim a few microns of fat from its liabilities.
It’s the thought that counts:
Yet Sangamon County Circuit Court Judge John Belz last week rejected all pension trims as a violation of the state Constitution, which holds that “[m]embership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” According to Judge Belz, there is “no legally cognizable affirmative defense” for impairing pensions benefit.
Except, well, 80 years of U.S. Supreme Court precedent. Federal courts have established that states may invoke their police powers to impair contracts. In the 1934 case Home Building & Loan Association v. Blaisdell, the U.S. Supreme Court ruled that emergencies “may justify the exercise of [the State’s] continuing and dominant protective power notwithstanding interference with contracts,” which the U.S. Constitution otherwise prohibits.
The Supreme Court has since developed a balancing test that allows states to impair contracts when it is reasonable and necessary to serve an important public purpose. The level of legal scrutiny increases with the severity of the impairment.
A contract cannot be binding if it promises something that was not the contract’s to promise. Generous retirement benefits are not generous to the fewer and fewer workers who are left to pay for them; not generous to the poor who are left with fewer services; not generous to outsiders who are tapped to pay for the contracted benefits when the local authority runs out of money, even though they had no say in how those benefits were granted, therefore no duty toward the recipients’ retirement condos in Boca.
If you have the facts on your side, pound the facts. If you have the law on your side, pound the law. If you have neither on your side, pound the table.
With the facts showing the practice unsustainable, and the law showing the practice unsupportable, what is left?
Table-pounding appeals to our fairness and humanity. Whenever I hear that, I always check to see that my wallet is still in my pocket. We the taxpaying public have met our obligations toward the social contract. What about the obligations of those on the receiving end who took too much? Isn’t their position motivated by greed? Why can’t they be shamed for taking from the poor and vulnerable?
And what in G-d’s name is sacrosanct in a contract between two conflicted parties, the unions and decades of corrupt one-party Democrat rule? One side lavishes excessive benefits on the other in exchange for kickbacks in the form of campaign contributions and votes.
It’s a win-win, except for everybody else.