SPRINGFIELD — The fate of Illinois’ landmark pension overhaul landed Wednesday in the hands of the state’s seven Supreme Court justices, who used roughly an hour of oral arguments to closely question whether lawmakers may invoke “police powers” to override constitutional protections of pension benefits.
Most of the questions came from Justice Robert Thomas, who asked Illinois Solicitor General Carolyn Shapiro repeatedly about her claim that the Great Recession led to Illinois’ pension systems being underfunded by roughly $111 billion.
Shapiro told the justices “it is the state’s solemn responsibility to protect the public interest, the public health, safety and welfare in extreme situations.” That’s why she argued that Illinois, in light of its financial “emergency,” may use its police powers to enact the 2013 pension reform law approved by lawmakers and former Gov. Pat Quinn, even though employees and retirees argue the constitutional protection of pensions is “absolute.”
Thomas countered that Illinois’ “emergency” is arguably of its own making, as properly funding the pension systems would have helped it weather the Great Recession. He asked whether the court could be handing lawmakers a way out of other contracts — by creating an emergency and using it to invoke police powers.
“Why isn’t that tantamount to giving the state license to modify its own contractual obligations for any reason?” Thomas asked.
Shapiro said the state can’t invoke its police powers “simply, ever.”
“There has to be a substantial emergency,” Shapiro said, “and the state’s actions have to meet a relatively demanding standard.”
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At one point, Thomas asked Shapiro to square her arguments with the state’s decision to let the temporary income tax hike roll back from 5 percent to 3.75 percent this year. Shapiro said, “it’s fair to say that the budget situation in our state is not yet fully resolved.”
“Raising taxes alone can’t always be the answer to a fiscal crisis when the state might otherwise want to use its police powers,” Shapiro added later.
The justices did not have as many questions for the two lawyers representing the employees and retirees trying to block the law. But Chief Justice Rita Garman did ask one of their lawyers, Gino DiVito, whether the state’s police powers “ever allow them to impair these pensions, under any circumstances?”
“Your honor, certainly not under these circumstances,” DiVito said. “Certainly not. It is absolutely clear that the intent of the drafters, when the General Assembly invoked fiscal problems, fiscal difficulties, not having enough money, it was absolutely clear that that was not a basis that could be relied upon.”
Illinois’ constitution states that membership in any Illinois pension system “shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
The justices did not rule, but took the case under advisement.
When the arguments ended, Illinois AFL-CIO President Michael Carrigan, speaking for the We Are One Illinois union coalition, said, “workers and retirees didn’t cause” the state’s financial problems.
“Over a lifetime of service, they paid into their pensions out of every paycheck,” Carrigan said. “But politicians failed to honor their own responsibility.”
Laurence Msall, the president of the Civic Federation, a tax policy and government research group, said if the Supreme Court ultimately strikes down the pension bill as unconstitutional, its work shouldn’t be over.
He said the court has a “higher obligation” to offer state lawmakers and the governor a reasonable, constitutional alternative.
“The Civic Federation remains optimistic that the Illinois Supreme Court will find the pension reform changes . . . constitutional and reasonable,” Msall said.
However, he added: “If they do not find the pension reforms constitutional, we would hope that the court would provide direction on how the state would go forward, without the gutting of services or the taxing at a high level that would drive businesses and residents out of our state.”
Jon Seidel is reporting from Springfield. Natasha Korecki is reporting from Chicago