Editor's note: This column was previously published at Wirepoints.org.
By defeating the Fair Tax proposal, Illinoisans made clear they want reform, not higher taxes. But what reform, specifically?
Priority No. 1 couldn’t be more clear. Pensions are Illinois’ biggest problem and they cannot be fixed without an amendment to the state constitution. Our courts have made that clear. The only alternative route to reform is bankruptcy, and there is no appetite for that.
Mark Glennon
An amendment would work, but the right wording is essential. We should replace the pension protection provision with this:
Nothing in this Constitution or in any law shall be construed to limit the power of the General Assembly to reduce or change pension benefits or other benefits of membership in any public pension or public retirement system, whether now or in the future, accrued or yet to be earned.
The point of wording that simple and comprehensive is to assure that all state law obstacles to reform are eliminated. It would then be up to the General Assembly and governor to pass fair, reasonable reforms for each state and local pension.
That would leave only federal law as a theoretical obstacle. Reform opponents sometimes say the federal constitutional rule against impairing contracts would doom the effort. That’s simply untrue. Under federal law, courts have long allowed contracts to be reformed to serve a higher public purpose during emergency circumstances like Illinois unquestionably now has.
But – and here’s what reform opponents overlook – only fair, reasonable reforms properly tailored to the emergency at hand are allowable under federal law. In other words, the law that opponents claim is an obstacle in fact provides the assurance of fairness that pensioners want.
The key is ensuring that the amendment language isn’t booby-trapped or loaded with complications that might raise some state law issue. State law issues must be wiped out entirely because our state courts have shown they will use anything they can to stop reform.
Wouldn’t this approach have to wait two years? An amendment to our constitution would require approval of three-fifths of both houses of the General Assembly then voter approval in 2022.
No. We can act now and begin the savings now. If Illinois is serious about reform the legislature could immediately begin adjusting its annual pension contributions to a reformed schedule. Bond rating agencies and Illinoisans considering flight would take significant comfort in that. The message would be clear: “We are fixing this.” And the bipartisan supermajority needed in the legislature would all but ensure that the amendment would happen.
At Wirepoints, we earlier released a 112-page report including all the details on how this approach to reform can work. It includes specific reform options scored by pension actuaries, tailored to protect smaller pensioners and conformed to the federal requirements of fairness and reasonableness. Those options would save more each year than the Fair Tax would supposedly have raised. Visit our Pension Solutions page to see the details.
Voters asked for reform. Have lawmakers heard them?
Author Mark Glennon is founder of Wirepoints.