Reforming Pensions Legally

The editors of the Wall Street Journal weigh in on the court decision in Illinois striking down the legislature’s tepid public pension reform law:

Republican Bruce Rauner has his work cut out rehabilitating Illinois from years of liberal-public union misrule, but now he may also have to cope with a willful state judiciary. Consider a lower court judge’s slipshod ruling last week striking down de minimis pension reforms.

The fiscally delinquent state has accrued a $111 billion unfunded pension liability—a 75% increase from five years ago—in addition to $56 billion in debt for retiree health benefits. Incredibly, the state is spending more of its general fund on pensions than on K-12 education. One in four tax dollars pays for retirement benefits. Last year the state had to defer $7 billion in bills to contractors. This is after Democrats in 2011 raised income and corporate taxes by 67% and 30%, respectively. Little wonder that Illinois has the nation’s worst credit rating.

It is not the job of the courts to craft a solution to the problems that Illinois’s legislators have built brick-by-brick over a period of decades. It is the job of the legislature to do it and the Illinois legislature needs to find a solution to the problems that public pensions pose to the state that are consistent with Illinois law. It is the job of the courts to ensure that whatever solutions the legislature come up with meet constitutional muster.

The decision the Sangamon court made, that Illinois’s constitution prohibits the very actions the legislature has taken, is not outrageous. It’s simply black letter law.

Illinois’s problem is not primarily a legal one. It is primarily a political one—that if they vote for real reform some legislators will face primary opposition and in all likelihood won’t be re-elected. But that’s the job they were hired to do and it’s not the court’s job to make it easier for them.

3 comments… add one
  • Guarneri Link

    On more than one occasion I have observed that government is often less about addressing collective social needs and more about establishing reliable voting blocs. Well…..

    “Incredibly, the state is spending more of its general fund on pensions than on K-12 education.”

    In any event, did the court address eliminating the liability through bankruptcy? Because a solution to the raw arithmetic of realistic potential returns vs existent liabilities is the null set. The ship will run up on the sand bar. The only question is when.

  • In any event, did the court address eliminating the liability through bankruptcy?

    Is not wanting to risk antagonizing key voting blocs cause for bankruptcy? Unless it is that would be premature in Illinois’s case. There are plenty of things that can still be done but the legislature isn’t ready to fall on their swords yet and it’s not the court’s job to obviate that necessity.

  • Guarneri Link

    I know, but I see no evidence of intent, or mechanism to bring, the situation to a head before it’s too late. Once the bond holders accelerate IL will be in a bankruptcy. If the result of a bankruptcy is that only bond holders or taxpayers bear the burden you won’t recognize this state.

Leave a Comment