By: Mark Glennon*
Governor J.B. Pritzker wants Illinoisans to believe that an amendment to Illinois’ pension protection clause is doomed to fail. He went so far as to call the effort a “fantasy” during his budget address on Wednesday. Pritzker’s claim is that any amendment would be struck down because of the Contracts Clause of the U.S. Constitution.
Pritzker is either dishonest or horribly misinformed. Court rulings and actual experience in other states make it clear that Pritzker is wrong. A pension amendment would almost certainly work to allow for needed reforms to most of our 667 pubic pensions in Illinois.
This is important because an amendment is essential if we want serious public pension reform. The only alternative is bankruptcy. That’s because without either an amendment or bankruptcy, changes to pension benefits are prohibited by the pension protection clause in the Illinois Constitution, our state courts say.
Why is Pritzker wrong? Let’s put this in plain English, without legalese:
The most recent lesson from the courts came last year in Rhode Island after the City of Cranston lowered certain pension benefits. Some pensioners went to court trying to invalidate the cuts. There was no state constitutional issue there, making the case just like we’d have here after a proper constitutional amendment.
So, the only thing pensioners could base their case on was the U.S. Constitution, including the Contract Clause Pritzker referred to. That clause prohibits states from breaking contracts, and pensions are contracts in Illinois.
But the Rhode Island Supreme Court ruled against the pensioners. The Contract Clause and other U.S. constitutional matters are not blanket rules against breaking contracts, the court reminded us. The United States Supreme Court has long said that.
The Rhode Island court weighed all the circumstances in making its decision – how hard off Cranston, RI was, the reasonableness of the reforms and similar matters. Protecting contract rights gives way when there’s a “higher public purpose,” as one nationally recognized legal expert put it.
That is, government has to be able to provide proper services. Pension costs were squeezing out money for proper services in Cranston, just as in Illinois.
“We the People,” in other words, are not bound by a suicide pact because of the Contract Clause or anything else in the U.S. Constitution. Pensioners tried to appeal their loss to the United States Supreme Court but the high court let the Rhode Island decision stand.
Then there’s Arizona’s experience. It had a state constitutional pension protection clause just like in Illinois. They’ve amended it twice to cut benefits, mostly with the approval of union pensioners. Unlike Illinois, most of them saw the long-term benefit of reform even for pensioners.
However, not all pensioners agreed with the cuts. Yet none has sued under the Contract Clause or anything else. Still to this day any one of them could sue if they thought they could win, individually or as a group. They would sue if Pritzker were right about pension amendments being “fantasy.” They haven’t. They know they’d lose.
Where has pension reform been struck down under the United States Constitution, as Pritzker says would happen? Nowhere! Almost every other state has been reforming its pensions as problems became apparent over the years. None has been sued successfully under the U.S. Constitution. That’s why most are in better shape than Illinois.
How would this work in Illinois?
After a constitutional amendment that eliminates all state law issues, the reasonableness of pension reforms would depend on the circumstances of each pension. There’s no question at all that reform could be made for many of our worst off towns and cities with their own pensions. Their plight is far beyond the guidelines for breaking contracts laid down by the U.S. Supreme Court.
Even beyond the worst off, however, the vast majority of our other towns and cities already are cutting back basic services because of pension expense. It’s worsening rapidly and they are already overtaxed. Most would pass that “higher public purpose” test, or very soon will.
Same for the state’s own pensions. Yes, public unions and some of those pensioners might try to sue if we amend our state constitution and adjust benefits. But they would likely lose. Illinois, like most of its municipalities, would pass that “higher public purpose” test, or very soon will. The state has been losing money at the rate of $1.1 million per hour since 2001! That’s simply not sustainable. And Pritzker’s “Fair Tax” increase would barely dent that problem because new money from it is already promised away on other things. In fact, it would probably backfire by driving more people away.
The legal expert I mentioned summarized the reasons for a state constitutional amendment this way:
It is now time for all states to recognize what the U.S. Supreme Court and virtually all other state courts have agreed: For the financial survival of public pensions and for the necessary funding of essential governmental services and needed infrastructure improvements, reasonable and necessary modification of public pension benefits in times of dire financial distress must be permitted for a Higher Public Purpose as in the recent case of the City of Cranston, Rhode Island.
Support for an amendment is growing.
A pension amendment is essential if we want serious pension reform instead of bankruptcy. Pritzker, however, is effectively ruling out any meaningful reform by blocking an amendment. Why? Because he made that promise to public unions during his campaign.
And that’s why a growing number of voices on many sides of the pension debate are saying Pritzker is wrong and that Illinois should amend its pension protection clause. They include The Civic Federation, The Chicago Tribune, Crain’s Chicago Business, former Chicago Mayor Rahm Emanuel and former mayoral candidate Bill Daley.
Each has recognized the simple fact that it’s not an amendment that is fantasy. Rather, the fantasy is expecting Illinois to right itself without structural pension reform.
*Mark Glennon is founder of Wirepoints.
Some earlier articles on this topic by Wirepoints and others:
- What Illinois Can Learn From the Supreme Court of Rhode Island and Even Puerto Rico About Public Pension Reform – MuniNet
- Illinoisans overwhelmed by a ‘shadow mortgage’ of pension debts – Wirepoints
- Arizona Amends Its Constitutional Pension Protection Clause. World Doesn’t End. – Wirepoints
- Rhode Island Supreme Court Shows Illinois The Way On Pension Reform – Wirepoints
- Arizona voters show Illinois the path forward on pensions – Illinois Policy
- The Arizona solution to state pensions – Wirepoints in Crain’s
- Editorial: The quest for a pension amendment: Can Pritzker and Lightfoot save Illinois from itself? – Chicago Tribune
- There’s No Legal Reason Not To Pursue A Constitutional Amendment For Pension Reform – Wirepoints
- Illinois Constitutional Pension Amendment Is Long Overdue – Wirepoints
- Emanuel to push for constitutional amendment to solve pension crisis – Chicago Sun-Times
- Illinois lost $1.1 million per hour since 2001. Think about that. – Wirepoints
- Editorial: ‘Let the people vote’ on pension reform too – Chicago Tribune