By: Mark Glennon*
If the argument made by a coalition of public pensions in their court filing last week is correct (or if pension-friendy judges simply want to rule that its’ correct), then the best and only plausible defense the state has for upholding pension reform will have been lost without ever having been presented. Then, it will be fairly be asked why that defense wasn’t asserted earlier, and whether the Attorney General’s office was out-maneuvered.
The issue is whether, strictly as matter of law, an exception can be made to the plain language of the Illinois Constitution that prohibits diminishment or impairment of pension benefits based on what’s been called the “police power” or “reserved sovereign powers” defense. That’s the state’s defense that, because it’s broke, it cannot afford to pay for both pensions and fundamental state services, so pensions must be cut.
Never mind for now whether, as a factual matter, that argument is persuasive. That fact issue matters only if the state can convince the courts that the defense can properly be raised as a matter of law. The Illinois Attorney General has been preparing the factual argument, probably at great expense, with the help of economists it would use in expert testimony.
But last Thursday that coalition of unions filed a motion seeking an immediate ruling for a judgment on the pleadings and to strike that police powers defense. In other words, purely as a matter of law, they argue, the defense cannot be raised. If granted and upheld, the motion would effectively mean benefit reductions in any state or local pensions are unconstitutional. No exceptions. Case closed. The full text of the motion is linked here.
The key here is that the motion is based very heavily on the Illinois Supreme Court’s recent Kanerva ruling that held that healthcare subsidies are constitutionally protected just like pension benefits. But the court’s opinion is much more sweeping than that. It’s expansive language allows for no exceptions to the prohibition on diminishment or impairment, as the unions describe it. The unions cite other earlier cases for their position, too, but it’s the Kanerva opinion that makes their case, as they see it. Kanerva “forecloses as a matter of law” any attempt by the state to uses its “reserved sovereign powers” to override the pension protection clause, they say.
The problem is that the Attorney General, as the state’s lawyer, didn’t raise the police power defense in the Kanerva case — not the legal issue or the factual issue. Nor, as far as I have found, did the she even ask in Kanerva that any ruling there should be made subject to any later rulings on the legal permissibility of that defense. So, the state has never presented research, reasoning or oral arguments on the issue. That’s just tough luck if the union’s motion is granted based on Kanerva. The courts will have disposed of the issue on their own.
My reaction upon reading Kanerva was just that: What? No mention at all of the police powers defense? Why not and what’s the consequence? Why didn’t Ms. Madigan and her staff of fellow pensioners, representing taxpayers like me, at least secure some reservation from the court on the question of whether the defense is legally permissible if proved? That’s essentially what I wrote in this article after the decision.
Well, that’s apparently how the unions’ lawyers reacted, too, except giddily. Kanerva handed them the opportunity to close the books on the issue without ever letting the the state make its case to the courts.
The state no doubt will raise the defense in response to the motion, and say its exactly because it never presented the police power defense in Kanerva that the issue remains open. Maybe that’s procedurally correct, but the courts may do what the unions have asked by summarily disposing of the issue based on Kanerva. Also, this is more than a technical issue of procedure because it certainly will put the courts in an awkward position. With an apparently sweeping Supreme Court opinion allowing for no defenses or exception issued just last month, would they really now go back and and undo it? Probably not, the unions evidently think, and they’ve been winning so far.
In any event, this much is absolutely clear: If the unions’ motion is granted based on the Kanerva opinion, the police powers defense to pension reform will have been killed with no court ever having heard any argument on it or on why it should rightly be heard. And taxpayers will be asking, “how could that have happened?”
*Mark Glennon is founder of WirePoints, Inc.