* The Tribune editorial page reacts to today’s pension ruling…
Expect to hear politicians or advocacy groups or finance experts float notions you’ve never heard in Illinois. That to preserve money for pension costs, the state workforce may have to be drastically reduced, that work contracted to private firms that don’t have to provide such benefits. That as the cost of retirement benefits continues to skyrocket, more of the cost must be placed on the workers who will reap those benefits. That’s not to blame the workers; that’s to recognize brutal reality.
You won’t hear these and other dramatic thoughts only about state government: Friday’s ruling vastly complicates life for Chicago Mayor Rahm Emanuel, Cook County Board President Toni Preckwinkle and thousands of other local officials. They prayed that the court would uphold state attempts to curtail retiree benefits, or at least explain how future laws might be written to meet constitutional constraints. Friday’s decision offered neither. Maybe Emanuel et al. can offer the court more compelling arguments: Unlike the state, cutting benefits really is our last resort. But after Friday’s ruling, they’re running uphill.
So the huge enterprise of government in Illinois now confronts a challenge unlike any it has known: The new taxation necessary to satisfy all of these state and local pension demands would make this a ghost state.
A ghost state? C’mon, man.
Raising the state income tax back up to close to where it was before January 1st wouldn’t make this a “ghost state,” but it would prevent draconian budget cuts that would devastate this state. The Tribune blindly refuses to admit this because it hates that tax hike so very much.
Sometimes, you gotta find more income to pay your bills.
…Adding… From Wordslinger in comments…
–…a challenge unlike any it has known.–
Yeah, that Civil War, race riots, labor wars, polio, Depression, WWII, segregation, etc., it was all a stone-cold groove compared to today’s insurmountable and unprecedented problem of paying back borrowed money.
Seiously, they’re demented, should not be operating motor vehicles.
…Adding More… Gov. Bruce Rauner’s magical mystery pension reform plan which he adamantly refuses to unveil would allegedly save the state about $2.2 billion next fiscal year. While there is little doubt that we are staring into perhaps the worst fiscal crisis since the Great Depression as a result of the loss of the income tax hike money and gross Democratic mismanagement, losing out on those pension savings is hardly a crisis outweighing everything in the state’s history. The Tribune editorial board members probably ought to take a nap.
…Adding Still More… From Archpundit in comments…
===They prayed that the court would uphold state attempts to curtail retiree benefits, or at least explain how future laws might be written to meet constitutional constraints. Friday’s decision offered neither.===
Actually I believe Rich highlighted the road map the court gave on just this point. The ed board really is just lazy.
“Detroit offers such a strong example of default and bankruptcy that Chicago ends up being impugned by comparison,” said Matt Fabian, a partner at Municipal Market Analytics.
The broader economic and demographic positions of the two cities are vastly different. Chicago is the third-largest city in the country, with a vibrant economy and large, taxable population. Detroit had been suffering from a population exodus for decades, along with a crippled economy after much of the auto industry moved out.
“A property tax increase could solve Chicago’s problems tomorrow,” Fabian said. “But the city has chosen not to do that, even though it has the potential.” Chicago could raise taxes by 50 percent and still have lower taxes than New Jersey, he said. […]
That option, he said, was not available in Detroit, which is why the city eventually filed for Chapter 9. “It is very hard to see Illinois ever approving Chapter 9,” Fabian said. “Chicago is the heart of the state, and it is in no one’s interest to fall into bankruptcy.”
Detroit, on the other hand, was a drag on the state of Michigan and bore the brunt of much antipathy, said Fabian.
“The Supreme Court’s decision confirms that benefits earned cannot be reduced. That’s fair and right, and why the governor long maintained that SB 1 is unconstitutional. What is now clear is that a Constitutional Amendment clarifying the distinction between currently earned benefits and future benefits not yet earned, which would allow the state to move forward on common-sense pension reforms, should be part of any solution.”
Thoughts?
*** UPDATE *** Perhaps some wishful thinking from Mayor Rahm Emanuel?…
“Since taking office, our goal has been to find a solution to Chicago’s pension crisis that protects taxpayers while ensuring the retirements of our workers are preserved — something we achieved with Chicago’s pension reform for the Municipal and Laborers funds. That reform is not affected by today’s ruling, as we believe our plan fully complies with the State constitution because it fundamentally preserves and protects worker pensions rather than diminishing or impairing them. While the State plan only reduced benefits, the City’s plan substantially increases City funding which will save both funds from certain insolvency within the next ten to fifteen years and ensure they are secured over the long-term. Further, unlike the State plan, the City’s plan was the result of negotiation and partnership with 28 impacted unions to protect the retirements of the 61,000 city workers and retirees in these funds and ensure they will receive the pensions promised to them.”
*** UPDATE 2 *** Eric Madiar, the former legal eagle for Senate President John Cullerton who predicted years ago that this law would fail, reacts…
I feel fully vindicated by today’s Illinois Supreme Court decision and gratified by it. The decision clears the way for using a modified version of Senate President Cullerton’s contractual approach to achieve savings.
*** UPDATE 3 *** From Moody’s…
“Moody’s is currently reviewing the Illinois Supreme Court pension reform decision and analyzing its potential impact on the credit condition of the State of Illinois, the City of Chicago, public universities, and other Illinois municipalities and school districts. For the state, Moody’s current rating and outlook did not factor in the proposed pension reforms, but the ruling provides additional evidence that pension benefit reductions will not be permitted.”
Newly sworn in as Mayor of Springfield, Jim Langfelder ripped into the Steppenwolf classic [”Born to be Wild”].
Mayor Jim Langfelder joined other citywide officials and the new City Council in taking the oath of office Thursday afternoon at Sangamon Auditorium on the campus of the University of Illinois Springfield.
According to sources close to the Mayor, Langfelder rehearsed the song with the band After Sunset the week leading up to the performance.
* I always pegged Jim as a bit of a geek, but check out the video taken by a friend…
* The Illinois Supreme Court gave us a sort of road map for what pension reforms would be acceptable. Emphasis added…
The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible.
Moreover, no possible claim can be made that no less drastic measures were available when balancing pension obligations with other State expenditures became problematic. One alternative, identified at the hearing on Public Act 98-599, would have been to adopt a new schedule for amortizing the unfunded liabilities. The General Assembly could also have sought additional tax revenue. While it did pass a temporary income tax increase, it allowed the increased rate to lapse to a lower rate even as pension funding was being debated and litigated.
That the State did not select the least drastic means of addressing its financial difficulties is reinforced by the legislative history. As noted earlier in this opinion, the chief sponsor of the legislation stated candidly that other alternatives were available. Public Act 98-599 was in no sense a last resort. Rather, it was an expedient to break a political stalemate.
The United States Supreme Court has made clear that the United States Constitution “bar[s] Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole [citations].” (Internal quotation marks omitted.) United States v. Winstar Corp., 518 U.S. 839, 883 (1996). Through Public Act 98-599, however, the General Assembly addressed the financial challenges facing our State by doing just that. It made no effort to distribute the burdens evenly among Illinoisans. It did not even attempt to distribute the burdens evenly among those with whom it has contractual relationships. Although it is undisputed that many vendors face delays in payment, the terms of their contracts are unchanged, and under the State Prompt Payment Act, vendors are actually entitled to additional compensation in the form of statutory interest if their bills are not paid within specified periods. 30 ILCS 540/3-2 (West 2012). In no sense is this comparable to the situation confronted by members of public retirement systems under Public Act 98-599, which, if allowed to take effect, would actually negate substantive terms of their contractual relationships and reduce the benefits due and payable to them in a real and absolute way. Under all of these circumstances, it is clear that the State could prove no set of circumstances that would satisfy the contracts clause. […]
The State protests that this conclusion is tantamount to holding that the State has surrendered its sovereign authority, something it may not do. The State is incorrect. Article XIII, section 5, is in no sense a surrender of any attribute of sovereignty. Rather, it is a statement by the people of Illinois, made in the clearest possible terms, that the authority of the legislature does not include the power to diminish or impair the benefits of membership in a public retirement system. This is a restriction the people of Illinois had every right to impose.
As the ultimate sovereign, the people can, “within constitutional restrictions imposed by the Federal constitution, delegate the powers of government to whom and as they please. They can withhold or [e]ntrust it, with such limitations as they choose.” … The powers they have reserved are shown in the prohibitions set forth in their state constitutions. Munn v. Illinois, 94 U.S. 113, 124 (1876).
Reamortize the debt, raise taxes, spread out the pain evenly, and/or pass a constitutional amendment that doesn’t violate the Federal constitution’s “contract clause.”
If there is an attempt by the governor at passing a constitutional amendment, I’d bet it would be challenged in federal court. This thing is nowhere near over.
City Hall and the Rauner administration had no immediate reaction to the decision, but it implies bad things for them.
Emanuel last year negotiated reductions in benefits with unions covering about half of city workers and is working with police and firefighters for further changes. But the language of today’s decision appears to allow no exception for “negotiated” reductions in benefits. Rather, the benefits are owed, as in any contract.
Rauner, in turn, has proposed shifting all current workers into a new system with reduced benefits. But the court decision suggests that a worker is entitled to accrue benefits at the old rate until he or she leaves the payroll.
* “Illinois Gov. Pat Quinn smiles during the signing of the pension overhaul legislation bill Thursday, Dec. 5, 2013, in Chicago. Looking on from left are: Sen. Bill Brady, R-Bloomington; Senate GOP leader Sen. Christine Radogno; Rep. Darlene Senger, R-Naperville; Rep. Jim Durkin, R-Western Springs; House Speaker Michael Madigan and Sen. Kwame Raoul, D-Chicago”…
“A bad bill in Springfield would raise our electricity bills to protect Exelon’s bottom line. The Legislature should either rewrite it significantly or flick the off switch altogether.”
“There is a feeling here of a company trying to socialize the risks while keeping the profits private.”
“Though solar, wind and other generators of low carbon energy would supposedly qualify for the credits, the legislation is written to give a big advantage to Exelon’s nuclear plants. Yes, this legislation would hike your electric bill.”
“…Problem is, Exelon hasn’t provided much evidence that the plants are financial losers and it hasn’t promised to keep the plants open…”
“Good old Exelon. The company has come up with legislation to subsidize its nuclear reactors, get electric users throughout the state to pay for it and claim it’s in the interest of clean energy.”
“State lawmakers need to see this bill for the dirty trick it is and kill it.”
Just say no to the Exelon bailout. Vote no on SB1585/HB3293.
BEST Coalition is a 501C4 nonprofit group of dozens of business, consumer and government groups, as well as large and small businesses. Visit www.noexelonbailout.com.
* I’ll be updating this as we go along. The first one I’ve received is from Ty Fahner…
“There are no winners today. If there’s any good news, it’s that Chicago and Illinois are resilient, and we’ve responded to great challenges before. The Civic Committee stands ready to work with Governor Rauner and the General Assembly to craft a bipartisan solution to rescue the state from financial collapse and restore Illinois as a compassionate and competitive state.”
Ty Fahner
President
Civic Committee of The Commercial Club of Chicago
* Speaker Madigan’s spokesman said his boss will “take it under review” and continue to work on the issue, which he said was of vital importance to the state’s future.
* Senate President John Cullerton…
“From the beginning of our pension reform debates, I expressed concern about the constitutionality of the plan that we ultimately advanced as a test case for the court. Today, the Illinois Supreme Court declared that regardless of political considerations or fiscal circumstances, state leaders cannot renege on pension obligations. This ruling is a victory for retirees, public employees and everyone who respects the plain language of our Constitution.
That victory, however, should be balanced against the grave financial realities we will continue to face without true reforms. If there are to be any lasting savings in pension reform, we must face this reality within the confines of the Pension Clause. I stand ready to work with all parties to advance a real solution that adheres to the Illinois Constitution.”
* From the twitters…
State Sen. Linda Holmes, a union backer: "I really do think we have to start from scratch." http://t.co/qT1YFjYhUG
“Our goal from the beginning of our work on pension reform has been to strike a very careful, very important balance between protecting the hard-earned investments of state workers and retirees and the equally important investments of all taxpayers in education, human and social services, health care and other vital state priorities. In its ruling today, the Supreme Court struck down not only the law but the core of that balance. Now our already dire pension problem will get that much worse and our options in striking that balance are limited. Our path forward from here is now much more difficult, and every direction will be more painful than the balance we struck in Senate Bill 1.”
* Illinois Policy Institute…
Today the Illinois Supreme Court struck down Senate Bill 1, the pension reform law enacted in 2013 by former Gov. Pat Quinn. Illinois Policy Institute CEO John Tillman released the following statement on the state Supreme Court’s ruling:
“Illinois’ political elite have devised a pension scheme that is excessive, bloated, corrupted and was never affordable for Illinois taxpayers. While Senate Bill 1 did not solve the pension crisis, the legislation at least took a first step toward achieving parity between government workers who receive pensions, and the taxpayers who fund them.
“But with today’s ruling, the state’s high court says that state government’s No. 1 financial responsibility is paying the retirement of people who no longer work for state government. Pension costs are first in line, ahead of funding for public safety, education, helping the poor and disadvantaged, and all core services provided by state government.
“The court’s ruling suggested that raising taxes is a way to pay for pensions. Raising taxes will not fix a broken system. The pension system is beyond repair, and there will never be enough money to fund it. Case in point: The 2011 tax increase. That tax increase generated more than $31 billion, and 90 cents out of every $1 collected from the tax increase went to pensions. Yet it still was not enough to make the pension system whole.
“Ultimately, the only way Illinois can break the cycle of siphoning more and more tax dollars and sacrificing more and more state programs to pay for pensions is to follow the lead of the private sector and move new employees to a 401(k)-style system. In the short term, it will not be surprising to see calls to change the state constitution or allow Illinois to file for bankruptcy.”
* We Are One Illinois union coalition…
Illinois AFL-CIO president Michael T. Carrigan issued the following statement on behalf of the We Are One Illinois coalition of unions that represent public employees and retirees:
“We are thankful that the Supreme Court has unanimously upheld the will of the people, overturned this unfair and unconstitutional law, and protected the hard-earned life savings of teachers, police, fire fighters, nurses, caregivers and other public service workers and retirees.
“The Court’s ruling confirms that the Illinois Constitution ensures against the government’s unilateral diminishment or impairment of public pensions.
“Because most public employees aren’t eligible for Social Security, their modest pension—just $32,000 a year on average—is the primary source of retirement income for hundreds of thousands of Illinois families. While workers always paid their share, politicians caused the debt by failing to make adequate contributions to the pension funds.
“Public service workers are helpers and problem solvers by trade. With the Supreme Court’s unanimous ruling, we urge lawmakers to join us in developing a fair and constitutional solution to pension funding, and we remain ready to work with anyone of good faith to do so.”
* Senate Republican Leader Christine Radogno…
“Illinois has the nation’s worst-funded pension system and the biggest pension deficit of any state. Nearly a quarter of our budget goes directly to pensions or to pay off past loans used to cover short-term pension costs.
I am committed to working with everyone to find a solution that adheres to the Constitution. We must to work together in bipartisan cooperation with Governor Rauner – who has demonstrated his commitment to tackle the most difficult problems facing Illinois.”
* Sen. Gary Forby…
“I made a promise to the thousands of union members in my district that I would not support a pension reform plan that punishes working families,” said Senator Forby, Chairman of the Senate’s Labor Committee. “Now is the time to give labor a seat at the negotiating table so we can strike a fair balance between finding financial solvency and honoring our promises to workers.”
* Sen. Daniel Biss…
“Today the Illinois Supreme Court ruled that Senate Bill 1 is unconstitutional. While this is not the opinion the authors of SB1 had hoped for, we must respect the Court and strictly adhere to this ruling. The Pension Clause of the Illinois Constitution provides important protections, and today’s ruling proves the depth of those protections.
The state of Illinois and many of its local governments are still facing serious fiscal problems, including significant pension debt. I look forward to working with all parties to find ways to ensure that adequate resources are available to properly fund our pension systems, in the context of a responsible budget that funds crucial services. Our public employees, our government bodies and our taxpayers deserve nothing less.”
* Twitters…
Rep Nekritz on pension ruling "My overwhelming emotional reaction is I feel very sad for the future of Illinois. I feel very sad about that"
“I respect the Illinois Supreme Court, but disagree with the ruling. I am prepared to continue working on meaningful legislative reforms to save our public pension systems.”
“We are delighted that today’s Supreme Court opinion recognizes and ensures the pension rights of State employees, as required by our Constitution. And we trust that the General Assembly will address the State’s fiscal difficulties, in a manner consistent with the Constitution, and in a way that is fair to all the citizens of Illinois.” — Gino DiVito, attorney who argued state employees’ legal challenge to the Illinois Supreme Court.
* Charles A. Burbridge, executive director of the Chicago Teachers’ Pension Fund…
“While CTPF members were not directly impacted by the ruling on Senate Bill 1, the Illinois Supreme Court’s landmark decision to strike down this legislation is a welcome development for our members. This ruling clearly establishes that pensions are a promise to be kept, which is important to our members since they do not receive Social Security benefits and depend on CTPF pensions for their retirement security.
“Unfortunately, our Fund has been devastated by decades of underfunding by our employer. As a result, CPS faces significant challenges as it makes up for the impact of its past decisions. We hope that this ruling helps move forward the conversation about fully funding pensions for CTPF members.”
* Sen. Kwame Raoul…
Today, the state’s highest court affirmed that, as in all matters, we are bound by the plain language of the Illinois Constitution on the question of public employee benefits. This is not surprising news, nor is it an unwelcome reminder; constitutional limits protect us all – especially in times of fiscal crisis. The Court effectively illustrated the cyclical nature of economic fortunes, noting that Illinois faced a pension funding emergency at the time our current constitution was drafted. The rule of law remains a guiding constant.
This decision is a call to go back to the negotiating table and get serious about the range of options available to us to repair the state’s finances and meet its obligations in ways consistent with the constitution, sustainable for the future and fair to all concerned.
A number of approaches remain open to us, but the Court has made clear that the constitution’s prohibition on unilateral modifications applies to the lifetime of the contract made at the time of employment, not merely to benefits already accrued.
We return to our task aided by the insights of the Court, fully aware of our constitutional responsibilities as well as the severity of our fiscal condition, in partnership with all affected and open to new ideas.
* Linda Brookhart, Executive Director of the State Universities Annuitants Association…
”SURS member Henry Green introduced the Pension Clause to the 1970 Constitution to ‘guarantee [pension] rights.’ We are grateful that the Supreme Court recognized and affirmed those Constitutional protections.
“This is a victory for retired and current members of the State Universities Retirement System and the other public employee retirement systems. But, it is more than that. It is a victory for anyone to whom the State of Illinois owes a debt. As the Court noted in paragraph 85 ‘today it is nullification of the right to retirement benefits. Tomorrow it could be a renunciation of the duty to repay State obligations.’ Indeed, in oral argument we specifically noted that Illinois’ $50 Billion general revenue bond market could be put in jeopardy. And the court took it a step further ‘If financial markets were rational, this prospect would not buoy our economy, it would ruin it.’
“As the court noted, the underfunding of pension benefits has a long history that goes back well before the pension protection clause was adopted. The clause was intended to apply pressure on the legislature to meet its financial obligations to fund retirement benefits for employees who have spent their lives working for the state. That the State insisted on pursuing its policy of under-funding in the 44 years since the clause was adopted cannot now serve as an excuse for the State to renege on its obligation to pay pensions.
“Our attorney stated in oral argument that this was akin to the Lizzie Borden defense – ‘I killed my parents. Have mercy on me. I’m an orphan,’ a defense which every grade school child recognizes as preposterous. We are grateful that the Supreme Court did not buy into this defense. As a result of this opinion, employees retiring from the State of Illinois should have confidence in their pensions. And our members, members of the State Universities Retirement System can take comfort in knowing that their service to the students of this State did not deprive them of their retirement benefits.
“At SUAA we are committed to protecting the rights of retired and current public university and community college employees and will continue to do so.”
Rep. Elaine Nekritz, a Northbrook Democrat and one of the lead pension-law negotiators in the House, said that those other provisions were an attempt to strike a balance between employee benefits and the overall health of the state.
But the court’s action negates that balance, she said.
Nekritz also pointed to a section of the opinion that said “[a]dherence to constitutional requirements often requires significant sacrifice, but our survival as a society depends on it,” calling it an off-point summary of the circumstances.
“The goal of Senate Bill 1 was to put Illinois on more sound fiscal footing so that we could survive as a society,” she said. “So I found it odd that they made that statement, when what they’re really doing is making it more difficult to fund education, more difficult to fund competing demands … That one hit me pretty hard.”
The solution proposed by the [state Constitution] drafters and ultimately approved by the people of Illinois was to protect the benefits of membership in public pension systems not by dictating specific funding levels, but by safeguarding the benefits themselves… The purpose of the clause and its dual features have never been in dispute
* Clear cut…
The first issue, whether Public Act 98-599’s reduction of retirement annuity benefits violates this State’s pension protection clause, is easily resolved. The pension protection clause clearly states: “[m]embership in any pension or retirement system of the State *** shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” (Emphasis added.) Ill. Const. 1970, art. XIII, § 5. This clause has been construed by our court on numerous occasions, most recently in Kanerva v. Weems, 2014 IL 115811.We held in that case that the clause means precisely what it says: “if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired.”
This construction of article XIII, section 5, was not a break from prior law. To the contrary, it was a reaffirmation of principles articulated by this court and the appellate court on numerous occasions since the 1970 Constitution took effect. […]
Retirement annuity benefits are unquestionably a “benefit of contractually-enforceable relationship resulting from membership” in the four State-funded retirement systems. Indeed, they are among the most important benefits provided by those systems. If allowed to take effect, Public Act 98-599, would clearly result in a diminishment of the retirement annuities to which Tier 1 members of GRS, SRS, SURS and TRS became entitled when they joined those systems. As described earlier in this opinion, the new legislation directly reduces the value of retirement annuities for those members in no fewer than five different ways. While we presume statutes to be constitutional and must construe enactments by the legislature so as to uphold their validity whenever it is reasonably proper to do so (Wilson v. Department of Revenue, 169 Ill. 2d 306, 310 (1996)), there is simply no way that the annuity reduction provisions in Public Act 98-599 can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause. Those provisions contravene the clear requirements of article XIII, section 5, as set forth in the provision’s plain and unambiguous language and construed by the legion of cases we have just discussed. In enacting the provisions, the General Assembly overstepped the scope of its legislative power. This court is therefore obligated to declare those provisions invalid.
* Police powers…
That the annuity reduction provisions of Public Act 98-599 violate the pension protection clause’s prohibition against the diminishment of the benefits of membership in a State-funded retirement system is one the State has now all but conceded. After this court reaffirmed in Kanerva v. Weems that the pension protection clause means precisely what it says, the State shifted its focus to an argument it did not raise and we did not consider in Kanerva. The State’s position now rests on its affirmative defense that funding for the pension systems and State finances in general have become so dire that the General Assembly is authorized, even compelled, to invoke the State’s “reserved sovereign powers,” i.e., its police powers, to override the rights and protections afforded by article XIII, section 5, of the Illinois Constitution in the interests of the greater public good. This argument must also fail.
The circumstances presented by this case are not unique. Economic conditions are cyclical and expected, and fiscal difficulties have confronted the State before. […]
While these principles sound expansive, legislation impairing contracts has actually been upheld against contract clause challenges only rarely. George D. Hardin, Inc. v. Village of Mount Prospect, 99 Ill. 2d at 104. When the legislation has been directed at reducing pension benefits of State employees, this court has expressly held that it is “not defensible as a reasonable exercise of the State’s police powers” and declared it invalid under the contracts clause, as well as for other reasons. […]
In addition, because the state’s self-interest is at stake whenever it seeks to modify its own financial obligations, the United States Supreme Court has made clear that it is not appropriate to give the state’s legislature the same deference it would otherwise be afforded with regard to whether the impairment is reasonable and necessary to serve an important public purpose. “A governmental entity can always find a use for extra money,” the Court observed, “especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.” […]
The State protests that this conclusion is tantamount to holding that the State has surrendered its sovereign authority, something it may not do. The State is incorrect. Article XIII, section 5, is in no sense a surrender of any attribute of sovereignty. Rather, it is a statement by the people of Illinois, made in the clearest possible terms, that the authority of the legislature does not include the power to diminish or impair the benefits of membership in a public retirement system. This is a restriction the people of Illinois had every right to impose. […]
Under the State’s reasoning, the only limit on the police power would be the scope of the emergency. The legislature could do whatever it felt it needed to do under the circumstances. And more than that, through its funding decisions, it could create the very emergency conditions used to justify its suspension of the rights conferred and protected by the constitution. If financial markets were rational, this prospect would not buoy our economy, it would ruin it.
* Man, is this ever a strong statement…
The financial challenges facing state and local governments in Illinois are well known and significant. In ruling as we have today, we do not mean to minimize the gravity of the State’s problems or the magnitude of the difficulty facing our elected representatives. It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. How we respond is the measure of our commitment to the principles of justice we are sworn to uphold.
* Severability…
We come, then, to the third and final issue presented by this appeal: are the invalid annuity reduction provisions of Public Act 98-599 severable from the remainder of the statute? […]
Among the 39 sections deemed “inseverable” are some of the specific provisions which impermissibly reduce retirement annuity benefits in violation of the pension protection clause. These include sections 2-119.1(a-1), 14-114(a-1), 15-136(d-1), and 16-133.1(a-1) (40 ILCS 5/2-119.1(a-1), 14-114(a-1), 15-136(d-1), 16-133.1(a-1) (West Supp. 2013)), which adversely affect the value of annual annuity increases. Under the express terms of section 97 of the Act itself, all 39 of the “inseverable” provisions must therefore fall with the provisions we have declared unconstitutional. When one eliminates those 39 provisions along with all the other annuity-reducing portions of the law that are void and enforceable under the pension protection clause, Public Act 98-599 all but evaporates.
Severability principles would doom the statute in any case. Under Illinois law, severability clauses are not conclusive. That is because a court’s authority to eliminate invalid elements of an act and yet sustain its valid provisions derives not from legislative fiat, but from powers inherent in the judiciary. The practice of holding statutory provisions severable from those that are found to be invalid originated in the courts long before severability clauses were adopted by legislatures. Although the use of severability clauses has now become common practice, we have noted that they are regarded as little more than a formality. […]
Applying these principles to the case before us, there can be no serious question that, with invalidation of those provisions of Public Act 98-599 which reduce the retirement annuities Tier 1 members of the GRS, SERS, SURS and TRS are entitled to receive, the entire statute must fall. As noted earlier in this opinion, the legislation’s proponents described its numerous provisions as “all part of an integral bipartisan package.” The overarching purpose of the law was to shore up State finances, improve its credit rating and free up resources for other purposes by reducing, i.e., diminishing, the amount of retirement annuity benefits paid to Tier 1 members of GRS, SERS, SURS, and TRS, particularly annual annuity increases, which the speaker of the House of Representatives himself referred to as the chief cause of the financial problems the Act was intended to address. 98th Ill. Gen. Assem., House Proceedings, Dec. 3, 2013, at 7 (statements of Representative Madigan). The annuity reduction provisions are therefore not merely central to the statute, they are its very reason for being. Without them, the legislature would not have enacted the law at all. To leave those remaining provisions standing once the core sections are stripped away would, under these circumstances, yield a legislation package that no longer reflects the legislature’s intent. The circuit court was therefore correct when it concluded that Public Act 98-599 is void and unenforceable in its entirety
* Nothing yet from the governor’s office. From the Illinois AFL-CIO…
Just received word that the Rauner anti-worker agenda has been pulled from the Adams County Board agenda for May 12. We will keep you posted if it comes back.
Alert for upcoming Rauner anti-worker agenda activity: Saturday, May 9 – Henry County Board Executive Committee, 8 a.m., 307 West Center Street, Cambridge
* Meanwhile, parsing the Speaker’s decision to call the governor’s “right to work” proposal for a vote next week…
“The message may well be that if they want to accomplish anything this session, then Rauner had better get off a couple of things that have almost no chance of passing,” said Mike Lawrence, a longtime statehouse journalist, former aide to Gov. Jim Edgar and retired director of the Paul Simon Public Policy Institute.
While cautioning he had no inside scoop, Lawrence said, “I think it will be clear after this vote that right-to-work has virtually no chance of passing. I have a difficult time seeing where anything on the union front is going to happen.”
One by one, Madigan is addressing issues that Rauner has raised, Lawrence said. And by showing the governor where he seriously lacks votes, Madigan might be saying it’s time to shift focus.
Political scientist Chris Mooney said the message from Madigan to Rauner may be one of “who’s for what and who’s not.”
Although enormously accomplished in business, Rauner might also be getting a lesson from the speaker on the legislative process, said Mooney, director of the University of Illinois’ Institute of Government and Political Affairs.
They’re both right, plus more.
…Adding… I gave a speech last night and I wasn’t able to post House GOP Leader Jim Durkin’s response to Madigan’s right to work vote plan…
“I believe the working groups, particularly the one dealing with this issue, need to continue their work negotiating consensus. That is a better approach to take.”
* And from the University of New Mexico’s Tamara Kay…
The most rigorous research study available–published in 2011 by the nonpartisan Economic Policy Institute and conducted by Heidi Shierholz (now the chief economist of the US Department of Labor) and Elise Gould–controlled for 42 variables. It found that right-to-work laws result in lower wages and a lower likelihood of health care and pensions for union and non-union workers. It also shows right-to-work laws have no impact on economic growth.
Right-to-work proponents, however, have used “research” reports that control for few if any variables, to suggest that right-to-work states have done better on a variety of growth measures, predicting that their state would similarly benefit by passing a bill.
For example, the Wisconsin Public Research Institute, a member of the free-market-oriented State Policy Network, published such a report before the state passed its law that claimed that adopting right-to-work could increase per-capita income by 6 percentage points. But the study only controlled for eight variables, which isn’t nearly enough to control for all the different factors that affect changes in income.
In other words, the conclusions are meaningless. In the world of medical research, this would be like testing a cancer drug without using a control group that was not given the drug, ensuring that its pure effect could be isolated.
[Password protection removed and comments opened because the press release was finally issued.]
* House Speaker Michael Madigan has scheduled yet another committee of the whole for next Tuesday…
I have a call in to the Speaker’s office about the topic. Watch this post for updates.
Also, keep coming back to the blog today. Some big news is about to hit.
…Adding… I’m hearing the committee of the whole topic is tort reform. Still waiting on a call back.
*** UPDATE *** Press release…
Madigan Asks Full House to Discuss Illinois’ Civil Justice System
CHICAGO – House Speaker Michael J. Madigan on Friday announced the Illinois House will convene in a committee of the whole at noon Tuesday to discuss Illinois’ civil justice system and the protections it provides to victims and their families when killed or injured in accidents caused by severe negligence.
“Our justice system is often the last chance for victims and their families after their lives were torn apart by acts of carelessness,” Madigan said. “Even those who have never set foot in a courtroom are protected by our system because it allows any person to expose shoddy products and reckless actions that make our state less safe.”
As part of a discussion on Illinois’ civil justice system, the committee of the whole will hear from victims of medical malpractice and the family members of individuals killed in accidents or injured by dangerous products.
“When Illinois victims’ protections are discussed, unfortunately the bottom line sometimes is considered more important than what is fair and right. Special interests spend millions in attempts to change our court system to work against regular citizens. But too often it is our neighbors and co-workers – middle-class families – who need the court’s protections the most,” Madigan explained. “We must listen to the victims, their families and others who have seen firsthand how a strong civil justice system provides an avenue for their voices to be heard and fairness to prevail, and how a weak civil justice system leaves victims and their families traumatized several times over.”
Like the committee of the whole convened this week to discuss assistance for injured workers, Madigan cited the importance of the issue and the need for input from all House members as discussions on changes to the civil justice system continue.
* The new governor has meant more subscriptions and more advertising revenues, so this is no surprise…
According to a review of state lobbying records requested by the Quad-City Times Springfield Bureau, 1,733 lobbyists registered with the Illinois Secretary of State’s office from January through April.
The number is up from 1,700 during the same time period last year and up by nearly 100 lobbyists who registered in 2013. […]
The numbers also show a move away from companies having their own, in-house lobbying teams. So far this year, there are 1,973 lobbying entities or organizations, up from 1,763 five years ago.
When it comes to wining and dining lawmakers, the biggest spending lobbying organization so far in 2015 is the Ounce of Prevention Fund, which is headed by First Lady Diana Rauner. Reports show the group, which is a public-private partnership that prepares children for success in school and in life, has spent $132,415 to wine and dine lawmakers this year.
Interesting.
*** UPDATE *** From the Ounce of Prevention Fund’s Megan Meyer…
Hi Rich-
We saw that Capitol Fax picked up the Quad City Times story on increased lobbying activity this year, and wanted to clarify the information reported about the Ounce of Prevention Fund.
The expenditure reports we filed with the state included our annual luncheon at an expense of $130,000 (which includes all costs of the event – meals, on-site materials, etc.), which dramatically inflates the appearance of our spending on lobbying efforts. For 14 years, our It’s Good Business to Invest in Young Children Annual Luncheon has been our premier public education and fundraising event that brings together the business, philanthropic and civic communities in support of early childhood education. Of the more than 850 attendees, only two were affiliated with state government. That event is not a lobbying event.
Our new legislator breakfast that we held in January is typical of our direct lobbying efforts (and was reported on an earlier expenditure report), and we spent $336 on a breakfast for 36 people, including 11 elected officials.
Please let me know if you have any other questions.
