Illinois' Crisis of Leadership

The New York Times reports that Illinois has tried, but failed, to fix its broken pension system:

If ever there was a moment when Illinois’s drastically underfinanced pension systems had a real shot at being repaired, some state leaders thought it would be this week.

Nearly everyone in this Democrat-controlled Capitol agreed that the circumstances had reached the point of crisis. More than 30 departing lawmakers were preparing to give up their seats on Wednesday, so worries about political futures could, for now, be tossed aside.
 
And several proposals, including one requiring higher contributions from state workers and teachers and limiting cost-of-living increases, were on the table.

But as the lame-duck legislative session drew to a close on Tuesday evening, there was no deal. Lawmakers began talking optimistically about how they would keep searching for a fix to the nation’s most underfinanced state public pension system during a new session in the months ahead. And the shortfall in the state’s pension systems, now about $96 billion, will keep right on mounting at a rate, according to an estimate by Gov. Pat Quinn, of $17 million a day.

For months, Mr. Quinn and others had held up this weeklong stretch — before new lawmakers are sworn in — as a make-or-break moment. “We have to be bold,” Mr. Quinn, a Democrat, said Tuesday morning. He urged lawmakers not to allow the state’s economy “to be held hostage by political timidity” and called a pension overhaul the “challenge of our time.”

The problem is not merely political, however–there is a serious legal issue lurking in the background, serious enough to potentially invalidate at least part of any grand bargain legislators might strike.   The Illinois Constitution contains a provision that was designed to prevent the very thing Illinois legislators are trying to accomplish, at least with respect to existing pension arrangements:

SECTION 5. PENSION AND RETIREMENT RIGHTS

Membership in any pension or retirement system of the State, any unit of local  government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

What this seems to me to require is a constitutional amendment, approved by the citizens of the State of Illinois.  Otherwise, suits are sure to follow.  I have no idea whether the citizens of Illinois would approve such an amendment, but I suspect it would be a challenge.  Unlike the amendment in Alabama, which allowed the state to tap into its permanent fund–a pot of money that does not and will not, for the foreseeable future, have a significant impact on Alabama citizens’ lives–pension payouts have direct, forseeable effects on many thousands (maybe millions) of people in Illinois.

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