The Supreme Court's two not-so-magic words on state pensions

The Illinois Supreme Court's pension reform decision Friday runs 15,000 words, but its message to state government can be summed up in two: Pay up.

In their unanimous ruling, the seven justices told the state there is nothing tricky about the Illinois Constitution's pension protection clause: "Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired."

And, they said, there's a reason why that clause exists and why its language is so simple: To prevent the state from doing exactly what it tried to do with the 2013 pension reform package.

For those who had hoped the state would be able to trim its $110 billion unfunded pension liability, this was the end of the line. The bill is due in full.

Understandably, retirees and current employees enrolled in the five state pension systems greeted the decision as a victory. And for them, it is. They'll collect every cent promised them under current terms and, upon retirement, will see their pensions grow by 3 percent every year, compounded annually.

That was the deal they made when they signed up and they upheld their end of the deal faithfully.

Really, though, there are no winners here. This year, just shy of 20 cents of every dollar in state taxes you pay goes toward pensions. That amount will continue to grow. This year the state will contribute $6.09 billion to pensions from a total operating budget of $31.1 billion.

In the budget year that starts July 1, pension obligations go up to $6.8 billion from an operating budget that will be less than this year's. If you believe Gov. Bruce Rauner's budget plan, it'll be $27.8 billion.

Welcome to Illinois, where we spend one-fourth of our budget on pensions yet struggle to properly fund our schools or provide adequate services to the developmentally disabled. Oh, and we'll probably close the fiscal year with around $6 billion in unpaid bills.

How did we get here? Mostly by decades of mismanagement by lawmakers, who consistently failed to put in sufficient money to the pension systems. When push came to shove in May and budgets were due, it was a whole lot easier to short the pensions and spend the extra money on things voters like.

At the time, the unions representing active employees were happy with this arrangement. By putting less into pensions and spending more right now, state employees could get raises and schools got more money. (Want proof? Go to rebootillinois.com/sb27/ to see witness slips from union presidents supporting a bill allowing the state to skip $2 billion in pension payments in 2005.)

But assigning blame is irrelevant now. The Illinois Supreme Court did a fine job of it in its decision.

"Obliging the government to control itself is what we are called upon to do today," the court wrote.

In other words, it's the government's fault; the government we sent back to Springfield year after year. Now we have to pay for "our" mistakes. Rauner says Friday's decision means it's time to amend the state constitution and rewrite the pension clause.

But that doesn't address the $110 billion bill we just received, which now becomes Rauner's immediate problem. The now-invalidated pension reform law, the court wrote, "was in no sense a last resort. Rather, it was an expedient to break a political stalemate."

For decades, our lawmakers governed via such "expedients." With Friday's stinging decision and Rauner taking a no-nonsense approach financially, maybe we've marked new era in Illinois government.

We better hope so, because we're going to pay for the old era for a long, long time.

Matt Dietrich is executive editor of Reboot Illinois, an organization devoted to reform in Illinois government.