Guest blog post by Sheila Weinberg, CEO and founder of Truth in Accounting
The Illinois Supreme Court ruled unanimously that the Illinois pension reform law is unconstitutional. This means that taxpayers in Illinois will continue to grapple with the growing pension debt, which is currently over $100 billion.
As Truth in Accounting has indicated for years, the unfunded pension liabilities are definite obligations, but the vast majority of these liabilities have not been reported on the state's financial report. In 2014 Illinois did not report 75% of these liabilities because the state does not use the same accounting rules as corporations.
Because the state has hidden these liabilities, the pension costs in the state's budget were vastly understated. Therefore the state has not truly balanced its budget. This has made it impossible for taxpayers to hold their elected officials accountable, because they have not been told the true costs of government.
Although the Illinois Supreme Court upheld the constitutionality of the pension protection clause, what about the state constitution's balanced budget clause? Illinois Auditor General William Hollander has commented that the budgets have not been balanced for years. Evidence of this is the fact that the state is more than $100 billion in debt. Can you really balance your budget and accumulate more debt at the same time?
In addition, Illinois Comptroller Daniel Hynes, late Judy Baar Topinka, and Leslie Munger have all stated the state is breaking the state budget law.
Attorney General Lisa Madigan’s office argued that the pension reform was justified because of the state’s dire finances. If past governors and legislatures would have truly balanced the budget, the state would not be in a dire situation. The state's balanced budget clause was put in place to avoid financial mess, but the intent of the state's balanced budget clause has been circumvented with the use of accounting tricks, like including borrowed money as revenue, and not funding the state’s pensions.
The unions, state workers, and teachers have defended the pension protection clause. Who will defend the balanced budget clause?
Sheila Weinberg