Editor's note: This article has been revised from its initial version to include statements responding to the ruling from plaintiff John Tillman and the Illinois Attorney General's office.
The Illinois Supreme Court has sidestepped the question of whether Illinois taxpayers have the right to sue the state over potentially unconstitutional borrowing practices that put taxpayers on the hook for payouts worth billions of dollars.
But the state high court still won’t allow a particular lawsuit against the state to continue, challenging two specific bond issues, worth a combined $14 billion, as the high court said the man who brought the lawsuit waited too long to lodge his objections. Allowing the lawsuit to continue at this stage, the court said, could improperly expose the state to default.
John Tillman
On May 20, the Illinois Supreme Court issued the unanimous opinion in favor of the state, against plaintiff John Tillman, who serves as CEO of the Illinois Policy Institute.
For nearly two years, lawyers for Tillman and for the state have been in court, ostensibly battling over the question of whether the Democrat-dominated Illinois General Assembly violated the state constitution when lawmakers authorized the state to borrow the billions of dollars in two bond issues approved 14 years apart, in 2003 and 2017.
Tillman, of suburban Golf, centered his arguments on Article IX Section 9(b) of the Illinois state constitution. Tillman argued that provision of the state constitution limits the ability of the state to borrow money.
The complaint particularly focused on text requiring lawmakers to identify “specific purposes” for debt when issuing new long-term bonds. Tillman argued the “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 pensions for teachers, state employees and other public workers.
Rather, he asserted the state constitution should be interpreted to limit the state only to borrowing money for projects and purposes that have a defined time frame, such as a new building, and don’t merely either sustain an ongoing obligation, or pay regular bills, freeing lawmakers from more difficult choices between raising taxes or cutting state spending on services to make up for the shortfalls.
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, lawyers for the state argued the state constitution sets virtually no real limits on the ability of the state government to borrow money. Rather, they said, the “specific purposes” language merely requires 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.
But rather than seek to have the courts address that question, the state instead argued Tillman should have been prevented from ever bringing his lawsuit in the first place.
Under state law and court rules, Tillman and other plaintiffs must first secure permission from the court to bring his lawsuit.
Lawyers from the Illinois Attorney General’s office argued Tillman’s suit should be barred, because it had no chance of success.
In Sangamon County Circuit Court in Springfield, Judge Jack Davis sided with the state, and denied Tillman permission to file. The judge further explicitly ruled that the state’s bond issues were constitutional, despite hearing no arguments on that question.
That decision was overturned by the Illinois Fourth District Appellate Court in Springfield, which ruled Tillman’s claims were sufficient to allow him his day in court as a taxpayer on a legal question of “first impression” – meaning, a claim the courts in Illinois have not yet considered.
The state then appealed to the Illinois Supreme Court. The high court heard arguments from lawyers for Tillman and the Attorney General in March.
In those arguments, Tillman’s lawyers repeated their assertions that Judge Davis had overreached. They argued that, so long as the lawsuit was not “frivolous or malicious,” the courts, under Illinois appellate court precedent, had an obligation to consider such a constitutional challenge brought by an Illinois taxpayer.
The Illinois Supreme Court, however, said Tillman’s interpretation of the precedent was a “misreading.”
The decision was authored by Chief Justice Anne M. Burke, with concurrence from all of the other justices on the high court. Burke’s husband, Chicago Ald. Ed Burke, is a prominent Illinois Democratic powerbroker who faces federal indictment on corruption charges.
Citing the 1963 decision of the Illinois Second District Appellate Court in Strat-O-Seal Mfg. Co. v Scott, the unanimous court said the precedent doesn’t only limit judges to deciding whether to accept cases on the basis of whether the lawsuit is “frivolous or malicious.” Rather, Justice Burke wrote, it also allows judges to reject taxpayer lawsuits against the state.
“Rather, the (appellate) court held that such petition may be denied if ‘a filing of the complaint is otherwise unjustified,’” Burke wrote.
The Supreme Court opted not to rule on the question of whether Tillman’s claims concerning the constitutionality of the bond issues.
Rather, the court opted to instead apply the so-called legal doctrine of laches. Court’s can apply laches against plaintiffs who essentially knew of a legal problem that harmed them, yet opted to wait to file suit, potentially placing the defendants in some peril of real harm.
In this case, the justices said, Tillman waited 16 years to challenge the 2003 bond issue, and two years to challenge the 2017 bonds.
“We find that this delay is unreasonable,” Burke wrote.
Tillman, Burke said, “offers no excuse for why he waited … to file his action challenging the constitutionality of the bonds.”
Further, Burke wrote, allowing Tillman to continue with his challenge of the 2003 and 2017 bond issues would place the state at risk of a “default on outstanding bonds that are backed by the full faith and credit of the State.”
“Enjoining the State from meeting its obligation to make payments on general obligation bonds will, at the very least, have a detrimental effect on the State’s credit rating,” Burke wrote.
The justices noted that Tillman argued his complaint should be read as an attempt to block future bond issuances, and not to “undo past payments made by the State on the bonds.”
Burke, however, said the court rejected those arguments, as well, saying laches still blocks Tillman because “he had constructive notice of his legal claims years before filing his action.”
The Supreme Court reversed the Fourth District appellate court ruling, and affirmed the ruling of Judge Davis in Sangamon County, “although on different grounds than those relied upon by that court.”
Tillman has been represented in the action by attorneys Raoul G. Cantero, of the firm of White & Case LLP, of Miami, Fla., and John E. Thies, of the firm of Webber & Thies, of Urbana.
In response to the ruling, Tillman released the following statement:
“I am of course disappointed in the Illinois Supreme Court’s ruling. We are evaluating our options as to how to proceed from here. In the interim, I continue to be profoundly concerned about Illinois’ reckless debt accumulation. All Illinoisans should care about this. If the state doesn’t tackle pension reform now, it will slide into a fiscal crisis beyond repair that will threaten not only taxpayers and the people who depend on government services, but also people who are counting on their public-sector pension in retirement.”
A spokesperson for the Illinois Attorney General's office did not reply to a request for comment from The Cook County Record.
However, in a statement published at the CapitolFax blog, the Attorney General's office said:
"We are pleased that the court upheld the legality of the general obligation bonds approved by the General Assembly in 2003 and 2017 and rejected the plaintiff’s belated attempt to create unnecessary havoc in Illinois’ fiscal standing. The fact is that the plaintiff filed a lawsuit opposing the state’s issuance of bonds not days, not months, but years after the bonds were issued – in fact, after the money had been spent. Our position has been that, given the delay in filing the lawsuit, the plaintiff lacked a legal basis for filing at all, and we are pleased the court agreed."