Rep. Elaine Nekritz: The Audacity of…(well, …the audacity)
Falling snow, polar vortices, unending darkness, and
listening to Representative Elaine Nekritz on the radio defending the
indefensible…this truly is the winter of my discontent.
On the other hand, legal teams representing the public
sector workers are providing opening arguments before the Illinois Supreme
Court in contradiction of Lisa Madigan’s “sovereign powers” defense. The language in their opening is rational,
clear, succinct, and as hopeful to me as spring.
“…The
plain language of the Pension Protection Clause, the stated intentions of its
drafters, and this Court's precedent all compel the conclusion that the Act [SB
1] exceeds the constitutional limits of legislative power. The Pension
Protection Clause unambiguously prohibits the diminishment of public pension
benefits. Notwithstanding the defendants' insistence that the Clause
incorporates unstated exceptions to that absolute bar, the Clause cannot be
read to include the defendants' implied terms. It contains no exception for
exercises of the General Assembly's police powers or reserved sovereign powers”.
Right now, Illinois public workers and members of any union
know how painful it will be as primary targets of our new governor; in
addition, the most vulnerable in our state are about to be sacrificed as step
one in “’changin’ our ways.” It’s agonizing
but not surprising to be the objective of so much zavist and anger by the new governor.
But it’s also disheartening to be the topic of a kind of
echoing doublespeak that passes for the “new” Democratic perspective in the General
Assembly. Self-described “Chief
Architect of SB1” Rep. Elaine Nekritz is a case in point. Listening to Rep. Nekritz, one realizes our
pension systems are not a revenue source by which to make billions in hedge
fund investments win or lose…. but instead (for controlling Democrats) a ready
cash account from which to pay off creditors for the decades of fiscal dissolution
in the capitol.
In short, while our new iteration of Mitch Daniels resides in
Illinois’ leader’s mansion, even the opposing Democratic Party is salivating at
the possibility extracting a court-approved revenue source – our pension system. SB1 is the perfect Madoff-like vehicle, one
even a hedge fund manager like Rauner would envy. Money paid into the pension system by workers
would be used to pay the bills owed to the same system. Extra money extracted from this plan would be
used to pay off other bills to services, etc.
Sound like a Republican strategy? Wrong.
Here are some of the arguments/positions by the Democratic,
Assistant to Speaker Madigan’s Elaine Nekritz regarding the upcoming battle in
the Illinois Supreme Court over Senate Bill 1.
Question: “So, Representative, what does your bill
actually do?”
“The bill is designed to address two things:
“It address the enormity of the unfunded
liability that the pension systems face which right now is about $105 or $110 Billion. And when you talk about that in the context
of our state budget, general revenue funds are about $35 or $36 Billion so this
(pension unfunded liability) is about three times our annual budget.
The
Representative’s misuse of the term “enormity,” which actually means evil, not
size, is appropriate. The $105 billion
is what is owed for not making the payments into the pension systems for half a
century and diverting (stealing that money) for services without exacting any
price from the citizens of Illinois.
“The second problem is the percentage of the general
revenue fund that is dedicated to paying the bill due for the pension system. And
that has basically tripled in the last six or seven years.
“And its growing dramatically and part of the
reason is that I got into this is that its a trajectory that is unsustainable,
...and it does crowd out all the other priorities that I feel are
important...like educating kids, making college affordable, and keeping seniors
in their homes…all these services are strained as the pension bill goes up.”
This
consistent drumbeat by both Republican and particular Democratic legislators
(like Nekritz) to combine the annual normal cost of pension payments with the
unfunded liability (that is, the amount owed from half a century of not paying
what was owed and its permanent position at the head of the line of bills due
with interest). It is the quick and specious attempt to combine what was owed
(huge) with what is annually owed (small) to make it seem an impossible task
altogether.
In
addition, the massive increase in the amounts owed to the unfunded liability
(money owed from not paying before) are due to the General Assembly’s own
adoption in 1995 of a crazed punitive plan to pay exponentially more each year
for the debt, rather than amortize the debt over many years – something they
still could do to lessen the pain.
Question: Will
Senate Bill 1 result in a loss of pension earnings?
Representative Nekritz said the
changes in SB1 called for three things:
“There will be some impact on benefits of those currently working
and those already retired.
“ The bill dedicates over the next 25 years more money than the
state is obligated to pay under current law.
“And it has a guarantee that if the state does not make a pension
payment, the pension systems can go to court and enforce that commitment
legally.”
Interestingly, in the last
month a similar legal requirement (chapter 78) to making an expected payment in
New Jersey (after serious concessions by the public unions) was reneged upon by
Governor Chris Christie, and at the urgings of the unions, NJ Courts demanded
his reimbursement later. As of right
now, Christie is in the process of fighting the Court’s order. One need not wonder if Rauner might also
line-item veto such a payment by the General Assembly despite an earlier
“legal” agreement.
Question: Aren’t people upset
about the loss of the compounded COLA?
“The miracle of compounded interest when it works against you is less
than miraculous,” aid Representative Nekritz.
(For current retirees) “There's no reduction in the pension
payment. It's only the increases going
forward that would be impacted. so yes -
no reduction.
“Here’s the bottom line: Your
pension check will not get smaller...it will increase at a slower rate than it
currently increases...but it will not get smaller.”
The alterations and byzantine
calculations/loss of compounding will reduce the amount of money you will
receive, but it does not reduce your base annuity?? Imagine going to your broker who tells you
that your $10,000 investment is not going to lose money, but the interest you
earned would be now lowered from $100 a year to $1 a year. Will you have lost money in ten years?
“The state would save $20 Billion in owed money to the pensions in
this bill (by making the
pensioners and others pay for their own earned pensions).
“And for those who are currently working, the formula as to how you
calculate the check remains the same. We
didn't change any of those things (multiplier, calculation of final average
salary). We didn't change any of those
things with exception of those who receive salaries already in excess of $110,000
a year which in my mind is mostly school principals, superintendents, and those
kinds of folks.”
This sounds eerily
familiar. Perhaps we should remember the
new Governor Rauner’s identification of the thousands of retirees (as Rep.
Nekritz suggested – Superintendents, Principals, and Doctors…) in his budget
speech as exemplary of all public employees who make too much.
Question: What makes you believe that the
Illinois Supreme Court will uphold SB1 given the recent decision in Kanerva v.
Weems at the Circuit Court level?
For Nekritz (and AG Madigan), the court did not answer
whether the General Assembly can reduce benefits under the Constitution, and
that's where their affirmative defense argument before the Illinois Supreme
Court differs from the earlier Kanerva v. Weems case.
Rep. Nekritz maintains the real test is one of
“threshold.” That is, does the Pension
Clause meet any requirement of being absolute?
“And the argument the Attorney General put forward (and other Amicus
Briefs) is that there really is no such thing as an absolute protection whether
you're talking about the First Amendment, the right to free speech - or the
Second Amendment, the right to bear
arms... There's nothing absolute about
any of those, and the Pension Clause in the Illinois Constitution is the same protection.
It's all dealt with in context and the legislature has the ability to impose
reasonable regulations and to balance competing demands under the constitution.”
In other words, the General Assembly may determine that
words such as impair or diminish may not mean necessarily what
they mean in a contractual or even constitutional understanding when other
instances occur – like the sunset of an increased tax requirement, or the
refusal to make earlier payments into a system dependent upon payment by
contract by the state as ratified by its people. Try going to the bank and suggesting that you
have determined that their requirement for a certain percentage payment on your
loan for the Hyundai is not absolute and instead subject to your context –
paying for something I now deem more important after half a century of not.
But what about the Pension Clause – Article XIII, Section 5, in the
Illinois Constitution which states that employment is a contract that cannot be
diminished or impaired?”
“My
understanding of the history of it is that in the debate over 1970
Constitutional Convention this particular amendment did not go through the
normal committee process. It was
actually a kind of a floor amendment proposed at the last part of putting the
constitution together. And it really
did not get the same sort of study or debate that many of the other - most of -
did at the 1970 constitutional convention had.
(Republican representatives proposed it...)
This personally dismissive and
revisionist history is interesting but not in line at all with previous court
findings – and certainly not with the Chief Legal Counsel’s for the Illinois
Senate Eric Madiar’s exhaustive study of the history of the Article’s process,
proposal and purpose: “Is Welching on Public Pensions an Option for
Illinois?” The careful exegesis of
nearly 75 pages is available to readers and Representatives: http://www.illinoissenatedemocrats.com/images/pensions/D/Pension
Clause Article Final.pdf
In the preamble to Senate Counsel’s careful study, one will
find his illustrative quote:
“There is no moral
exemption for any man or body of men that breaks contracts. Nor is there any hope of public or private
respect for a contract breaker. A
contract breaker is an utter misfit as a citizen or a business man.” - Franklin MacVeagh, former President of the
Commercial Club of Chicago and U.S. Secretary Treasurer
And, again - In the opening of the
arguments presented this day:
“The Pension Protection Clause unambiguously prohibits
the diminishment of public pension benefits. Notwithstanding the defendants'
insistence that the Clause incorporates unstated exceptions to that absolute
bar, the Clause cannot be read to include the defendants' implied terms. It
contains no exception for exercises of the General Assembly's police powers or
reserved sovereign powers.”
Dum vita est, spes est.
