A state appeals panel has ruled a Springfield judge too easily brushed aside a lawsuit challenging whether the state wrongly borrowed billions of dollars simply to fund state worker pensions or pay down past due bills, saying the questions deserve to be heard in state court.
On Aug. 6, a three-justice panel of the Illinois Fourth District Appellate Court in Springfield said John Tillman, CEO of the Illinois Policy Institute, should be allowed his day in court to argue the state violated its own constitution when it twice issued state bonds in the past 17 years.
The decision was authored by Justice Robert J. Steigmann. Justices John W. Turner and Lisa Holder White concurred.
John Tillman
“Tillman’s complaint sets forth a colorable reading of the Illinois Constitution that does not appear to be frivolous on its face,” Justice Steigmann wrote. “While we express no opinion on the ultimate merits of Tillman’s claims, we conclude that the petition and complaint state reasonable grounds for filing suit.”
The decision overturned last year’s decision by Sangamon County Associate Judge Jack D. Davis.
Last year, Tillman, of suburban Golf, filed a petition in Sangamon County court in Springfield, seeking permission to sue the state to block the state government from continuing to pay off $14 billion of so-called general obligation bonds issued in 2003 and 2017.
Tillman’s complaint centered on Article IX Section 9(b) of the Illinois state constitution, which he argues limits the state’s ability to borrow money. The complaint zeroes in on the provision’s text requiring lawmakers to identify “specific purposes” for debt when issuing new long-term bonds.
Tillman has argued the language of that provision bars the state from issuing bonds simply to finance deficits and “plug holes” in the state’s budget, should the state not be able to collect as much tax revenue as it believes is needed or other obligations, like public worker pensions, place a greater demand on existing tax revenue.
Tillman argued lawmakers in both 2003 and 2017 failed to identify those “specific purposes,” keeping voters and taxpayers in the dark as to how that money was being spent, and unconstitutionally assigning to the state’s comptroller to decide how the borrowed money should be spent. The duty of apportioning state money falls to the state legislature under the constitution, not the state’s executive branch, of which the comptroller’s office is a part, Tillman noted.
Tillman’s arguments were met with ridicule from state lawyers, who asserted the “specific purposes” language merely required lawmakers to generally state what the money was to be spent on, allowing state leaders to issue long-term debt for any reason, including paying for regular government operations year to year.
In 2003, lawmakers said the bonds were issued to help the state pay its worker pension obligations.
And in 2017, state lawmakers said bonds were needed to help the state pay down a backlog of unpaid bills worth billions, owed to state vendors, including to health care providers owed money under the state’s worker health insurance program.
In his brief on appeal, however, Tillman assailed this use of borrowed money, saying it represented an attempt by the state to sidestep constitutional language forbidding state lawmakers from borrowing money to pay regular bills.
“… Under the specific-purposes requirement the State cannot simply say ‘I want more money, I’m going to issue these bonds, dump it into the general revenue fund,’” Tillman’s appellate brief said. “But that is exactly what the State did by building a backlog of unpaid vouchers for regular bills to the tune of $15.245 billion, and then borrowing to cover the deficit.
“If the State cannot borrow billions to dump into the general-revenue fund to cover operating expenses, it also cannot do the reverse: overspend its operating budget, build up a huge backlog of unpaid vouchers to vendors, and then borrow to pay them off.”
In his ruling, Judge Davis sided completely with the state. He said he believed Tillman’s lawsuit should be disallowed because it was “frivolous or malicious,” and so did not meet the criteria laid out in state law for taxpayer lawsuits against the state.
However, Davis went further, declaring the state bond issues were constitutional because the lawmakers said enough about the bonds’ purposes. And the Springfield judge further said the courts can’t supervise lawmakers’ bond issuances, because that is a “political” question that should be left to the state legislature.
In his appellate response, Tillman argued Davis’ reasoning couldn’t be more wrong.
He noted a “core” function of the state courts is to ensure state laws and actions abide by the state constitution.
On appeal, the Fourth District justices repeatedly noted they were not ruling on the merits of the case. And they indicated the state is free to continue throwing any number of legal tactics at the lawsuit to get it dismissed.
But the justices said Judge Davis’ opinion on whether Tillman’s case belonged in court was wrong.
"... Resolution of Tillman’s claims requires interpreting statutes and a constitutional provision to determine if those statutes are constitutional," the justices wrote.
The justices also rejected the assertion by Judge Davis and Illinois Attorney General Kwame Raoul that merely allowing Tillman to sue the state would cause the state to default on the bonds. The justices noted that neither the judge nor the state attorneys presented any evidence to back this assertion, and the attorney general’s office abandoned that argument altogether in its appellate briefs.
“… It appears to us that the most likely course of conduct for the State Officers would be to continue making all of the required bond payments until a court ordered otherwise,” Justice Steigmann wrote in the opinion. “Given this context, it is unclear how the filing of Tillman’s complaint would be an ‘unjustified interference with the application of public funds.’”
The case was sent back to Sangamon County court for further proceedings.
Tillman is represented in the action by attorneys John E. Thies, of Webber & Thies P.C., of Urbana, and Raoul G. Cantero III, of White & Case LLP, of Miami.
Tillman initially filed his petition in partnership with investment firm Warlander Asset Management, of New York.
Warlander has loaned $25 million to Illinois, according to court documents. The investment firm was not included as a petitioner on appeal.
The Illinois Policy Institute is a nonpartisan Chicago-based state policy think tank, which often encourages political, economic and legal reforms in Illinois. The IPI has never been a party to Tillman’s lawsuit.