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* Joe Cahill wonders if the Illinois Supreme Court might just surprise everyone…
Professor Mark Rosen of IIT Chicago-Kent College of Law says “there’s ample leeway” for the court to uphold the pension law if it accepts the principle that even constitutional rights can be limited when necessary to serve an overarching state interest. I suppose the justices could dismiss the argument as airily as Belz did, but a deeper analysis could lead to a different outcome.
Plenty of courts have ruled over the years that important state interests can justify limiting constitutional rights. In fact, the Illinois Supreme Court acknowledged the principle in a 1985 case involving a change in the computation of judicial pensions that left some judges with lower benefits. The constitution “does not immunize contractual obligations from every conceivable kind of impairment or from the effect of a reasonable exercise by the states of their police power,” the court said in Felt v. Board of Trustees. The court invalidated the law because the state failed to show it was necessary to advance an important state interest.
A similar line of analysis in the pension case would lead justices to consider whether the reforms serve an important state interest. In the Felt case, the court said, “The state has an undeniable interest and responsibility in ensuring the adequate funding of state pension systems.”
The pension reforms are intended to advance the same state interest. But are they “reasonable”?
Professor Ann Lousin of John Marshall Law School says it depends on what other options legislators might have used that would have less impact on the constitutionally protected benefits. Lousin thinks this is where the state’s argument breaks down, noting legislators could raise money to pay full pension benefits by hiking taxes and/or cutting spending (however politically distasteful that may be to lawmakers).
posted by Rich Miller
Monday, Dec 8, 14 @ 2:10 pm
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Previous Post: Rauner again vows support for capital bill
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whistling past the graveyard. A crisis of the states own making, brought on by over 90 years of underfunding the pension system which motivated and led to the 1970 pension clause being enacted is not going to be very convincing to the ISC.
Comment by facts are stubborn things Monday, Dec 8, 14 @ 2:15 pm
Made even more difficult by the recent ruling of the ISC in the Kanerva case. The court wrote that if there is any question as to the meaning of the pension clause it must be liberally construed in favor of those in the pension system.
Comment by facts are stubborn things Monday, Dec 8, 14 @ 2:18 pm
Hope this law is shot down. It is not fundamentally right to go back on what was promised.
Rauner is also correct that until there there is a representative 401K for state workers that the rest of us are on any pension reform will not go far enough to fix the budget problems.
Comment by Very Fed Up Monday, Dec 8, 14 @ 2:21 pm
If this piece was written July 2nd of this year — the day before the Supreme Court handed down the Kanerva decision — I would buy it. Kanerva changed everything…it ended the constitutionality guessing game. Six of the seven justice would have to overturn a decision they participated in just a few months time. That doesn’t happen.
Comment by Tony t. Monday, Dec 8, 14 @ 2:21 pm
I have to agree with Lousin’s argument. The GA had plenty of other options. It chose an option that had the greatest negative impact on retirees and employees when less egregious alternatives existed, such as Cullerton’s plan. Further, it seems like in the Kanerva case that the ISC established that health insurance was a benefit that was protected by the Constitution no impairment clause where this GA action might have been easier for the court to sustain. Finally, Belz did reject the state’s fiscal poor condition argument as a somewhat self-inflicted, flimsy crisis argument which did not subsequently justify sustaining a law that violated the impairment clause. As several have suggested, this is why the clause is in the Constitution, to protect employees against bad policy decisions that are based on political expediency. JerryG
Comment by NIUprof Monday, Dec 8, 14 @ 2:23 pm
The danger of accepting the “police powers” argument would be giving present and future legislators/governors the ability to get out of any past debt they choose in order to propose new spending “for the public good”. I’m pretty sure that in turn the ratings agencies would have no option but to drop our credit worthiness into the threatened “junk bond” status, making it really hard to issue future bonds at a decent interest rate. What good would the state of Illinois’ “promise to repay” be to ANYONE, bond holders, retirees, or vendors? I imagine the IPI and their ilk wouldn’t be happy if THEIR “promises” from the state are worthless.
But going back to professor Rosen’s argument - this is Illinois, so anything could happen…
Comment by Roadiepig Monday, Dec 8, 14 @ 2:24 pm
Remind me to bench Cahill in my fantasy Supreme Court league.
Comment by Michelle Flaherty Monday, Dec 8, 14 @ 2:26 pm
There have been plenty examples of spending pointed out here during the past year alone to undermine the ==police powers== argument.
We are broke, until a pet project or two needs funding lol.
Comment by Formerly Known As... Monday, Dec 8, 14 @ 2:27 pm
Bingo Tony t.
This court adheres to precedent.
They are not going to overturn themselves.
Comment by Yellow Dog Democrat Monday, Dec 8, 14 @ 2:28 pm
Hiking taxes …
The fact that the sky didn’t fall when the State personal income tax rate was raised to 5 % takes the wind out of the sails of the crisis argument.
Comment by Sir Reel Monday, Dec 8, 14 @ 2:31 pm
Seems to me the Felt’s case supports the decision of Judge Belz rejecting the state’s police powers.
In 1985, the Illinois Supreme Court revisited the Pension Clause in Felt v. Board of Trustees of the Judges Retirement System, 107 Ill.2d 158 (1985). In Felt, several judges sued the Judges Retirement System after it applied an amendment in the Illinois Pension Code that changed the formula to determine pension benefits. The new formula used an average of the last year’s salary rather than the salary on the last day of service to determine the annuity benefit. The plaintiffs argued that the Pension Clause protected their interest in having their benefits calculated by the rules in effect on their first day of service and that any change should only apply to new judges.
The court agreed, holding that the judges had a contract with their pension system and changing the formula amounted to an unconstitutional reduction of the benefits they were vested in from the day they joined the system. The court rejected the argument that the state could make these changes under its police power, characterizing the proposed change as a substantial impairment of benefits and not at all defensible as an exercise of the state’s police powers.
Anti-reformers use the Felt decision to illustrate their fundamental point: the Illinois Constitution codifies the relationship between public employees and the pension system as contractual with benefits that cannot be taken away without consideration. The question is what would constitute the kind of valuable consideration that would make benefit reductions constitutional. Pension reformers have an answer for that question.
Comment by Tsavo Monday, Dec 8, 14 @ 2:47 pm
@Sir Real
Hiking taxes …
=The fact that the sky didn’t fall when the State personal income tax rate was raised to 5 % takes the wind out of the sails of the crisis argument.=
Actually it did Sir Reel. Take a look at the graph showing employment and economic recovery in Illinois compared to the rest of the midwest after the 2009 recession. We were pretty even in recovery until mthe dem tax increase. then we nosedived relative to our adjacent states. Most of our peers have pretty much recovered their lost jobs, but Illinois is still about 150,000 jobs in the hole. That’s about $200 million in lost income tax revenue per year even at the old 3% rate.
Comment by Arizona Bob Monday, Dec 8, 14 @ 2:52 pm
In our very recent history, we’ve been paying more into pensions, something like 80% funding. Was this not attributed to the income tax increase? This shows that the state is not in such an emergency if it can properly or adequately fund pensions.
Comment by Grandson of Man Monday, Dec 8, 14 @ 3:08 pm
To do anything other than uphold Belz would be to make the clause “hortatory” like the obligation to fund the schools!
Comment by D.P.Gumby Monday, Dec 8, 14 @ 3:11 pm
He is just writing and speculating.
I don’t believe he has much to base that speculation upon.
Comment by VanillaMan Monday, Dec 8, 14 @ 3:13 pm
It’s upsetting to me that the argument is framed as “pensioners vs. The government. ” Pensioners were the gov. and they decided NOT to fund their own retirements so they could: pay themselves higher wages, better benefits and overtime, hire more of their peers, and pay less taxes.
I think this debt should be fairly apportioned by raising money through a retirement tax or capital gains tax that targets property sold by those over 65.
If you push the entire debt on a new generation they will simply move or overturn it when they take power
Comment by Millennial Monday, Dec 8, 14 @ 3:17 pm
“less egregious alternatives existed, such as Cullerton’s plan.” Just because the Cullerton plan stole less money does not mean that it was not also unconstitutional.
Comment by anon Monday, Dec 8, 14 @ 3:20 pm
It would seem that overturning a rather biting decision by the lower court is not something that the ISC would be inclined to do as it would take away any real certainty afforded to the State Constitution. At the same time, and as others have noted, there are legislative solutions to this problem (namely raising taxes). While they may not be politically popular the langauge of the constitution was rooted in sound governance not political popularity.
Comment by pundent Monday, Dec 8, 14 @ 3:25 pm
@AZ Bob
==Actually it did Sir Reel. Take a look at the graph showing employment and economic recovery in Illinois compared to the rest of the midwest after the 2009 recession. We were pretty even in recovery until mthe dem tax increase. then we nosedived relative to our adjacent states.==
Bob, How can you blame that on Illinois’ 5% take rate. Take a look at those tax rates in our adjacent states you mention at http://taxfoundation.org/article/state-individual-income-tax-rates or some other site.
But here are some highlights:
Illinois: 3% for 20 years; then 5% for 4 years; going to 3.75% on January 1st
Iowa: top rate of 8.98%
Wisconsin: top rate of 7.75%
Missouri: top rate of 6%
Kentucky: top rate of 6%
Other Midwestern state’s top rate:
Minnesota: 9.85%
Nebraska: 6.84%
Kansas: 4.89%
Ohio: 5.3972%
The exception of area states being higher than Illinois is Indiana: a flat tax of 3.4 percent,but they sock it to you with extra county taxes on one’s state income tax form.
Comment by Joe M Monday, Dec 8, 14 @ 3:32 pm
Nothing like regurgitating the AG’s failed arguments and putting your name on a column. Rosen’s students deserve better.
Comment by Norseman Monday, Dec 8, 14 @ 3:42 pm
3 things to keep in mind as the appeal goes forward:
1. Madigan did say that 4 judges would uphold the law;
2. Judges were in the health care bill but are not included in this bill; and
3. This is Illinois.
Comment by Second Street Monday, Dec 8, 14 @ 3:57 pm
The court might look at the current state income tax law, where revenue collection is being lowered on Jan. 1 without legislative intervention, as proof that a fiscal emergency doesn’t exist.
Comment by Six Degrees of Separation Monday, Dec 8, 14 @ 4:01 pm
It will be interesting to see if any other media outlets pursue this line of thought at all. If not, the story’s an outlier. If you see more of this, and it leads to discussions in the public square, there might be more to contemplate. I’m betting on outlier at this point. But there is a need for more cooperation all the way around to solve this problem.
Comment by A guy... Monday, Dec 8, 14 @ 4:07 pm
The Illinois Supreme Court’s ruling from Jorgensen v. Blagojevich stated, “No principle of law permits us to suspend [Illinois] constitutional requirements for economic reasons, no matter how compelling those reasons may seem.”
Comment by Joe M Monday, Dec 8, 14 @ 4:11 pm
People are overthinking this. No way is the Supreme Court going to buy any such argument. The Justices are analytical people, but if the economic necessity defense were accepted, then the judicial pensions would be as vulnerable. This is just talking without context.
Comment by SkeptiCal Monday, Dec 8, 14 @ 4:22 pm
Joe M - Maybe you can teach at Kent Law. You seem to have a better handle of case law than the dear professor.
Comment by Norseman Monday, Dec 8, 14 @ 4:47 pm
It’s too bad that the budget fix solution is being framed by either cutting programs and services or increasing taxes. There are numerous other options, especially those ideas of Ralph Martire. Also, let’s not forget that only $1.02 billion of the $6.19 billion FY2014 General Fund Contribution to pensions was for the “normal cost.” It’s really sad that $5.17 billion is going towards debt repayment because of the past sins of our political leaders. I’m not a financial expert and I know who is being hurt by this large amount of debt, but is there anybody who is actually benefiting from this debt?
Comment by forwhatitsworth Monday, Dec 8, 14 @ 4:55 pm
We’ve already read the SB-1 decision … it was 90% imbedded in Kanerva.
The only questions about an SB-1 opinion is if (a) the Court decides to draw a picture of what is legal so clearly that even the General Assembly can understand (in order to steer future legislation) or (b) if the Court is irritated enough with the GA (over the attempt to scapegoat the ISC for any tax increase) to decide it was partially wrong in their IFT (1975) and decides THIS time to ignore the separation of powers and actually order the GA on how to properly fund the pensions.
Given the normal limited approach to just ruling on the specific issue in question, I don’t really expect the court to go all activist and do either a or b … but I’ll bet several of the Justices would like to do so.
What’s going to be interesting about the decision will be exactly how it gets phrased, either straight impassive ruling or with a bit of legally phrased slap-down added.
Comment by RNUG Monday, Dec 8, 14 @ 6:31 pm
Cahill must have obtained his law degree from a local crackerjacks supplier.
His ‘logic’ is so inept that he should be embarrassed to put it in writing.
Comment by Federalist Monday, Dec 8, 14 @ 6:55 pm
Oh yeah, makes sense. The state is supposedly drowning in debt and we don’t have enough revenue to address these shortfalls. Since we were raising somewhat enough to at least make pension payments, as they should have been made each year, why don’t we just cut our revenue by collecting less in state taxes and see if we now have enough money–or maybe more? What? Does this strategy sound like a state that needs police powers because they don’t have enough money?
Comment by Anonymous Monday, Dec 8, 14 @ 7:17 pm
If you go opinion shopping long enough, someone like Rosen will come up with some baloney argument like police powers. Hoping our ISC judges are more reputable. So if the ISC doesn’t expedite the decision, does that mean they are doing a “deeper analysis”?
Comment by Soccertease Monday, Dec 8, 14 @ 7:30 pm
I appreciate his opinion but think this ship has already sailed
Comment by Former Merit Comp Slave Monday, Dec 8, 14 @ 8:14 pm
I’m in favor of the pension law, however, in the end, their opinion will say that even though right are not absolute this law goes too far.
Comment by A modest proposal Monday, Dec 8, 14 @ 9:30 pm
So “even constitutional rights can be limited when necessary to serve an overarching state interest?” Isn’t this viewpoint precisely the issue over which the American Revolution was fought? We adopted a written constitution in order to prevent this sort of injustice. If this viewpoint should prevail no one, no matter how poerful, will everbe safe.
Comment by Walter Esler Monday, Dec 8, 14 @ 10:11 pm
Yes, it’s possible, but 3 justices will have to take back what they wrote in Kanerva.
Comment by Harry Tuesday, Dec 9, 14 @ 12:06 am
Of course, even if they rule that a sovereign powers argument can be made, it’s another thing to find that argument persuasive on the facts.
Comment by Harry Tuesday, Dec 9, 14 @ 12:08 am
” even constitutional rights can be limited when necessary to serve an overarching state interest. ”
So the State can enact a graduated income tax, ignoring the Constitution—good news!
Comment by John L Tuesday, Dec 9, 14 @ 5:51 am
A fantasy by Cahill. The important point is not whether the Supreme Court has “leeway”; they always have leeway. The important point is how the court has ruled on cases like this previously. No Illinois Court has ever accepted the police power argument in regard to pensions. As Judge Belz noted, “The defendants can cite to no Illinois case that would allow this [police power] defense.”
Comment by Stay Tuned Tuesday, Dec 9, 14 @ 6:30 am