Everything just got much harder.
Now that the Illinois Supreme Court has thrown out a 2013 law designed to fix the state’s employee pension crisis, nobody has a clear Plan B, but you can bet on more political warfare, more scapegoating and more vitriol than ever.
We are hearing calls already for a hurried constitutional amendment to allow the Legislature to do what the Supreme Court ruled it cannot do now, financial emergency or not — unilaterally cut away at pension benefits. If public employee unions think they’re being demonized now, wait for what’s to come.
And get ready for a renewed push to raise the state’s income tax, this time permanently. The Court, in the derisive tone that permeates much of the opinion handed down Friday, noted that it’s hard to buy the Legislature’s argument that a historic fiscal crisis justifies the use of “police powers” to reduce pension benefits when, at the same time, it has allowed the state’s income tax to lapse to a lower rate.
And get ready for another push in Springfield to restructure the state’s whopping $111 billion in unfunded pension debt, paying it off over a longer stretch of time — as the state has tried to do before. As if there will ever be a day, as Illinois continues to kick its problems down the road, when a surprise pot o’ gold will solve all problems.
And get ready for an avalanche of new woes crashing down on the city of Chicago. Friday’s court ruling will make it considerably more difficult for City Hall and the Chicago Public Schools, facing some $30 billion in unfunded pension obligations, to restructure pensions for police, firefighters and teachers. The constitutionality of pension reforms already completed for municipal workers and labors, though it included extra money from the city and was reached with some buy-in from the unions, also may have been undermined.
When we called around to various experts Friday morning to get their take on the impact of the Court’s decision on Chicago and CPS, three of them offered the same indelicate two-word analysis: “They’re screwed.” Mayor Rahm Emanuel’s ability to avoid massive tax increases or massive service cuts — or both — just grew less likely.
In the short term, everybody would be smart to take a good, hard look at several practical — and highly partial — remedies offered earlier this week by the Civic Federation in a harsh analysis of Gov. Rauner’s proposed budget. First, Laurence Msall of the Civic Federation said, expand the sales tax base. Then consider taxing non-Social Security retirement income over $50,000. And ramp up state income taxes on corporations and individuals.
We’re more than a little disappointed in the Supreme Court ruling. We agreed with those constitutional scholars who argued that the magnitude of the fiscal crisis facing Illinois — our state’s future economic viability is on the line — justified the pension restructuring, which was to be accomplished largely by reducing cost-of-living increases to benefits. And if the use of “police powers” in some situations could be permitted under the constitution, then we believed the high court should have left it to a lower court to decide if this current crisis justifies such drastic measures.
But the Court was having none of that. If Abe Lincoln had to abide by the rules, the justices said, then certainly Illinois must as well.
“Adherence to constitutional requirements often requires significant sacrifice, but our survival depends on it,” the court wrote in a unanimous decision. “The United States Supreme Court made the point powerfully nearly a century and a half ago when it struck down as unconstitutional President Lincoln’s use of executive authority to suspend the writ of habeas corpus during the Civil War, a period of emergency that, by any measure, eclipsed the one facing our General Assembly today.”
A financial crisis, the Court added, “is not an excuse to abandon the rule of law.”
The way forward in Illinois now almost certainly will require contractual — rather than imposed and unilateral — changes in public employee pensions. Employees and the union leaders can’t be shut out of the negotiating room.
As for talk of pushing through a constitutional amendment to sweep away prohibitions against a unilateral pension reform, which Gov. Rauner proposed again Friday, that could prove a loser’s game. The amendment essentially would be for the expressed purpose of reneging on old promises to wipe out old debts, a motive that could run into serious constitutional trouble in the federal courts.
As we say, everything just got much harder.