State supreme courts in two big states, Illinois and New Jersey, slammed governors’ cuts of public workers’ pensions – and in the Land of Lincoln, they tossed the cuts out.
The two cases show that unions, which went to bat for their members, can defend their pensions – pensions which often make up for artificially lowered pay.
The definitive ruling came in the Illinois case on May 7, when the state Supreme Court voted 7-0 that a multibillion-dollar cut in public workers’ pensions there violated the state constitution. The day before, New Jersey Supreme Court justices cast a jaundiced eye on a similar scheme in the Garden State, with one justice calling its law a “bait and switch.”
The cases are also important because they throw a monkey wrench into efforts by governors and lawmakers of both parties, to put the blame for budget shortfalls on their own state workers. Yet another governor, Maryland GOPer Larry Hogan, also reversed course that week and decided to let a 2 percent worker pay raise there – which he had opposed – occur.
A former Democratic governor and the Democratic-run legislature passed the Illinois pension cut law in 2013, though current GOP Gov. Bruce Rauner defended it. AFSCME District Council 31 led the We Are One Illinois union coalition in challenging that pension law.
The Illinois justices said the state legislature has been a chronic offender in not paying workers’ pensions, even before the 1970 constitution took effect. They noted the first such report of pension underfunding was in 1917. “There is no dispute that employees have paid their full share as required by law at all times relevant to this litigation. That has not been the case with respect to the contributions owed by the General Assembly,” the justices said.
“We are thankful the Supreme Court unanimously upheld the will of the people, overturned this unfair and unconstitutional law, and protected the hard-earned life savings of teachers, police, Fire Fighters, nurses, caregivers and other public service workers and retirees,” said Illinois AFL-CIO President Michael Carrigan, speaking for the coalition.
“The court’s ruling confirms the Illinois Constitution” and its ban on public pension cuts. The average Illinois state pensioneer gets $32,000 yearly, he noted.
“Public service workers are helpers and problem solvers by trade. With the Supreme Court’s unanimous ruling, we urge lawmakers to join us in developing a fair and constitutional solution to pension funding, and we remain ready to work with anyone of good faith to do so.”
“The pension protection clause clearly states: ‘Membership in any pension or retirement system of the state shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired,'” the Illinois judges said. They noted their court has upheld it many times, adding “The clause means precisely what it says.”
Illinois then argued that its financial crisis justified the latest big cuts. “Exigent circumstances are not enough,” the justices replied. They weren’t even enough in the Great Depression, they noted. Then, the justices noted, Chicago – which faces its own pension crunch again – cut off the pay for two years for the entire city municipal court. The 37 judges sued to get their money, and won.
In the Garden State, Gov. Chris Christie, R-N.J., pushed the New Jersey pension law through the Democratic-run legislature in 2011. But at the Supreme Court session in Trenton on May 6, he disavowed it. That law mandated the state pay up past shortfalls into their pension fund in return for big increases in the workers’ pension contributions.
When Christie defaulted on $1.57 billion in payments, the Communications Workers – who represent the overwhelming majority of New Jersey state workers – and other unions, sued. The judges were skeptical, at best, to Christie’s arguments against his own law.
“The very proponents of this legislation now come before the court just a few years after passage and ask it to be declared unconstitutional,” Justice Barry Albin told Christie’s assistant attorney general, Jean Reilly. “This is sort of unprecedented.” He then asked her if the state still wants its workers to contribute more to their pension fund.
“If you’re doing that, is that some sort of bait and switch?” Albin asked. “Are you giving the public workers their money back?”
“This bill has been described as a bipartisan compromise,” said Chief Justice Stuart Rabner. “What was the compromise, if not increased contributions on both sides?” The state’s side of the compromise was the payment that Christie promised via his law – and then defaulted on, claiming, again, a budget crunch.
The New Jersey justices gave no indication when they would rule in the case. A lower court judge had sided with the unionists and their pension plans, and the state had appealed.
But New Jersey unionists were not content to leave their pensions up to legal wrangling. They took their problems with Christie to the streets – again – as well, by holding a massive rally in downtown Trenton on May 12.
“Breaking the law is nothing new for the Christie administration,” the state AFL-CIO said on its blog, discussing the rally. “The state can’t possibly manage to make a full pension payment if it is lining the pockets of multi-million dollar corporations.
“The legislature must come to the table with a plan to raise revenue to make the full payment. We get them to do that by making phone calls non-stop to their offices. We send our message by all of us protesting in front of the statehouse on May 12th and demanding the full payment. We must let the legislature know we will not tolerate otherwise because public workers have already made increased payments for less benefits.”
Photo: We Are One Illinois