Illinois taxpayers should have no ability to challenge in court the “specific purposes” Illinois lawmakers give to borrow billions of dollars, lawyers for the state have told the Illinois Supreme Court.
However, attorneys for a prominent conservative taxpayer argued it is the state that needs to prove their stated purposes for borrowing big bucks are specific enough to meet the standards of the Illinois state constitution.
On March 16, the lawyers squared off before the state high court on what both sides conceded was a complex legal question that, if ultimately decided in favor of the taxpayer plaintiff, could leave Illinois’ state government facing default on billions of dollars in loans.
Raoul Cantero
| White & Case
The argument centered on a petition filed by John Tillman, CEO of the Illinois Policy Institute, seeking permission to sue the state to block the state government from continuing to use taxpayer funds to pay down $14 billion of bonds issued in 2003 and 2017.
Tillman, of suburban Golf, centered his claims on Article IX Section 9(b) of the Illinois state constitution. Tillman argued that provision of the state constitution limits the state’s ability to borrow money.
The complaint particularly focuses on text requiring lawmakers to identify “specific purposes” for debt when issuing new long-term bonds. Tillman argues that “specific purposes” clause should be read to forbid state lawmakers from borrowing money to finance deficits or “plug holes” in the state’s budget, such as the shortfall faced by the state when funding pension obligations.
Tillman has argued lawmakers in both 2003 and 2017 failed to identify “specific purposes” when it issued bonds, and then unconstitutionally assigned to the state comptroller the power to decide how the borrowed money was spent.
In 2003, bonds were issued to pay state worker pensions.
In 2017, bonds were issued to help the state pay down a backlog of unpaid bills worth billions.
In response, however, Illinois state attorneys have argued Tillman should be blocked from ever filing his lawsuit.
Under state law and court rules, Tillman cannot simply file suit against the state, but must first secure permission to bring his lawsuit.
While conceding Tillman’s petition raises a legal question not yet considered by Illinois’ courts – a concept known as “first impression” - the Illinois Attorney General’s office has argued that Tillman’s complaint should still be barred because it has no chance of success.
They argue the state constitution merely requires Illinois lawmakers to describe with “precise specificity” why they are issuing the bonds, and then secure approval from a three-fifths supermajority in the Illinois General Assembly.
A Sangamon County judge in Springfield sided with the state, and denied Tillman permission to file. Judge Jack Davis, further, explicitly ruled that the state bond issues were constitutional.
That decision, however, was overturned on appeal. The Fourth District Appellate Court said Tillman’s complaint was “colorable” enough to allow him his day in court as a taxpayer.
While the appellate panel expressed “no opinion on the ultimate merits of Tillman’s claims,” they said Tillman had presented “reasonable grounds for filing suit.”
Both sides noted the complex legal questions involved.
However, Assistant Illinois Attorney General Richard Huszagh continued to urge the court to declare Tillman’s complaint meritless on its face, and thus, not worthy of further hearings.
He asserted Tillman’s claims also are opposed by past interpretations of the provisions of the state constitution that Tillman claims limit the state’s borrowing powers.
He said the case presents the Supreme Court with an opportunity to “put (such claims) to rest, for once and for all, for the benefit of the state” and for the state’s ability to borrow funds, as needed, in the future.
Justices, however, questioned whether it was as clear as the Attorney General claimed that the framers of the state constitution in 1970 would have quickly rejected Tillman’s claims that the purpose of the provisions of the state constitution in question actually limited the purposes for which the state can borrow billions of dollars.
Justices also questioned whether courts must simply accept any reason given by legislators for such massive borrowing.
Huszagh noted the framers could have explicitly “substantively limited” the ability of lawmakers to borrow, but opted instead to merely require a supermajority vote and a description of the bonds’ “specific purposes.”
“Specific purposes meant ‘specific purposes,’” Huszagh argued, and not the “unwritten” distinction between “permissible” and “impermissible” borrowing, suggested by Tillman.
Tillman’s lawyer, Raoul G. Cantero, of the firm of White & Case LLP, of Miami, Fla., however, argued the nature of Tillman’s claims should secure Tillman the chance to prove his case.
Cantero argued the standard was not whether Tillman can win, but merely, at this point, whether the lawsuit can be considered “frivolous.”
Cantero argued Tillman has raised a legitimate constitutional question over whether Illinois lawmakers violated the state constitution in borrowing billions, simply to pay overdue bills and make pension payments.
He asserted lawmakers have used the bonds to sidestep safeguards established in the state constitution against deficit spending, and then unconstitutionally delegated to the state comptroller’s office the power to determine how the borrowed money was spent.
Framers of the state constitution, Cantero said, “certainly didn’t consider large, long-term borrowing would be used to fill a budget hole.”
Justices, however, questioned whether Tillman may be asking too much of the court, essentially asking for a court order requiring the state to stop paying the bonds, and default.
Cantero, however, said such a default cannot be assumed at this stage, and could be the subject of further arguments in court, as a debate over the proper remedy for the alleged unconstitutional actions.
If the Supreme Court finds lawmakers issued the bonds illegally and unconstitutionally, then, Cantero said, “the chips have to fall where they may.”
Tillman is also represented by attorney John E. Thies, of the firm of Webber & Thies.
The Supreme Court has not yet issued a decision in the case.