The editors of the Wall Street Journal are not happy about the Illinois Supreme Court decision I posted on yesterday which found that the Illinois legislature’s 2013 law aimed at reducing the state’s public pension liability was unconstitutional. They declaim:
All of this means that Illinois and its municipalities may soon have little choice but to raise taxes or restructure debts to pay for pensions. Chicago, whose credit rating is two notches above junk, faces a $20 billion unfunded liability for pensions and $1.1 billion balloon payment next year. Unions (and perhaps investors) were counting on a state bailout, but now they will probably beg Washington for a rescue.
Actually, there are any number of other strategies the state could use. We could amend our constitution, a move that is already under way. Not only is that iffy it will be time-consuming.
We could reduce state payrolls. That can be done in two ways: by cutting the pay of state employees and reducing their number. Both could be tried. Cutting the pay and budgets of state legislators would be a good start. Minimum wage is the floor so, presumably, the legislature might suddenly cultivate a vital interest in raising the state’s minimum wage.
The state, counties, and municipalities could try renegotiating their contracts with their employees’ unions to fit the straitjacket the Illinois Supreme Court has measured for them.
The legislature could enact a graduated state income tax. We could return our Medicaid system to its pre-2000 configuration—then-Gov. Rod Blagojevich was a significant force behind trimming the state’s contribution to its employee pension fund in order to expand its Medicaid system.
The alternatives are almost limitless. More than likely, however, they’ll just raise taxes. The evidence that they can realize enough revenue that way to fill the budget gaps without economizing in other ways is slim to non-existent.
Let’s not lose sight of the reality that it’s the state legislature that got us into this fix. It’s a legislature whose members have overwhelmingly just been re-elected. While we’re amending the constitution, we might consider granting the electorate the power to recall any elected official in the state and broadening the initiative.
