A Sangamon County Circuit Court judge is expected to decide soon whether to allow an unconventional lawsuit that challenges Illinois' borrowing habits to proceed.
We'll cut to the chase: We hope Judge Jack Davis Jr. allows the case to move forward. Why? About 244 billion reasons. That's how many dollars the financial watchdog group Truth in Accounting estimates Illinois taxpayers eventually will owe due to unfunded pension liabilities, health care obligations and unpaid state bills. The debts have piled up over decades but accelerated since the early 2000s, dragging the state's credit rating to near junk status.
So yes, taxpayers deserve a shot at having someone contest Illinois' tradition of overborrowing. The case is considered a Hail Mary attempt, even though it raises legitimate concerns about the manner in which Illinois politicians have borrowed money in the bond market to balance budgets and pay for operations.
At this phase, the judge is merely deciding whether the case is frivolous or malicious, the threshold for tossing taxpayer cases before they can be formally filed in Illinois. This lawsuit is neither.
Brought by New York hedge fund operator Warlander Asset Management and the head of the Illinois Policy Institute, John Tillman, as an Illinois taxpayer, the lawsuit challenges instances in 2003 and 2017 when Illinois lawmakers and governors approved large-scale borrowing. The plaintiffs claim the borrowing through general obligation bonds violated the revenue article of the Illinois Constitution. The article, drafted and debated at the 1970 constitutional convention, includes language that debt can be issued for "specific purposes," such as a road-building project or a new school, not just for any purpose, which is how elected officials have applied it, the plaintiffs say.
Debate during the constitutional convention acknowledged the vagueness of the revenue language and anticipated a future lawsuit might be filed to set perimeters. Well, here it is.
The state borrowed $10 billion in 2003 to pay down pensions and cover operational expenses. Lawmakers and Gov. Bruce Rauner approved borrowing in 2017 to pay down unpaid bills, which also violated the intent of the clause, the plaintiffs argue. The only exceptions for massive borrowing under the constitution are for emergencies or for short-term debt that can be repaid swiftly. But that's not how general obligation bond debt has been deployed.
In Illinois, government and political leaders have used borrowing to cover over the damage caused by their profligate spending. That's less a specific purpose than it is a desperate scheme.
The state, represented by Attorney General Kwame Raoul, argues the lawsuit is nonsense and should be tossed at the get-go. Raoul's office questions the motives of the plaintiffs. The hedge fund wants to protect its interests in Illinois bonds it holds, and could benefit from a wiping clear of some of the state's debt. Tillman is a longstanding advocate for fiscal discipline in government. The plaintiffs are not secretive about their motives.
Gov. J.B. Pritzker and other Democratic statewide officeholders have mocked the lawsuit and shamed the plaintiffs for pursuing a potentially injurious legal challenge that, if successful, could further destabilize state finances and limit future borrowing.
We would ask: How injurious have previous legislatures and governors been to rank-and-file Illinois citizens who now face a mountain of debt? Piling up irresponsible, unbalanced budgets and imperiling the state's five pension funds seems pretty injurious, doesn't it?
The case deserves closer examination of its merits. Killing it now would reinforce the impression that Illinois public officials are beyond challenge. If it throws a scare into Springfield's big spenders, so be it. We hope the judge, in weighing motives, considers those of all sides -- including taxpayers.
Chicago Tribune, Tuesday