By: Mark Glennon*
A Sangamon County Circuit Court granted labor’s motion to invalidate SB1, Illinois’ pension reform law. The court’s order is linked here.
The court granted labor’s motion for a judgement on the pleadings, meaning that no trial is needed and the bill is void as a matter of law. No affirmative defenses are allowed, including the state’s “police powers” argument that the state is too broke to pay its bills. That complex defense, which the state had prepared in detail with the assistance of paid, expert economists, won’t be heard.
The ruling will be appealed, probably directly to the Illinois Supreme Court.
A few thoughts:
Mercifully, the court did invalidate all of SB1, including the horrid funding guaranty it contained, which would have forced untold additional appropriations into the pensions.
The decision doesn’t matter much. SB1 would have reduced the unfunded liability for four state pensions by just $20 billion in total (that’s what the A.G. says in its sword pleadings on behalf of the state). The state-reported total unfunded liability as of June 30, 2014 was $111 billion. Add $50 billion for unfunded healthcare liabilities which the Kanerva decision recently ruled are also constitutionally protected. Use real numbers with proper assumptions, not “Illinois Math,” and the true total is now well over $200 billion. That’s just for the five state pensions. Never mind the other 675 municipal pensions in Illinois.
The decision was rightly decided and entirely predictable. Accepting the police powers argument would have meant court-based management of the state budget, including decisions like how much taxes can be raised, and priorities between pensions and other obligations. The Illinois Supreme Court surely will uphold the decision and invalidate the law.
Questions should be asked about whether Attorney General Lisa Madigan blew her chance to argue the police powers defense. She did not raise it in the Kanerva litigation earlier this year, allowing that case to become the leading precedent on which this new ruling was based. We discussed the question here.
Count on the politicians who authored the doomed, inadequate law to now cry, “we did the hard work on pension reform, but those darn courts struck it down. Most of them knew this would probably happen, and happen after the election.
No pension reform that depends on Illinois courts will work. The judges are pensioners who clearly hate pension reform, and the Kanerva decision proved they will just make up the law that suits the pension results they want. The lawyers who write the reforms and defend them in court are pensioners, too.
Will somebody please propose real reform now?
By: Mark Glennon*