Taxpayers can rejoice now that the State Supreme Court has rejected two pension lawsuits — brought by public employee unions —that “could have added an additional $1.3 billion in new costs for the 2015-2017 budget (state and local).” The lawsuits sought to ignore previous decisions made by the state Legislature to (1) “repeal automatic cost-of-living increases for participants in several first-generation pension plans” and (2) “repeal a law that once let employees share in stock gains when investment returns on pensions were red hot over several consecutive years.”
The arcane dispute – based on legislation passed by Democrats to reward their campaign supporters – mainly involved “gain-sharing”, a way of allowing certain pension plan holders a share in “extraordinary investment returns” when the economy was hot. But there would be no risk shared by the unions, that would all be on taxpayers – no rainy-day funds would exist to “prop up the pension funds in a downturn.”
The broader issue facing the State Supreme Court was “whether lawmakers had the legal right to make changes to what they thought were conditional pension benefit increases.” In their brief, unions argued that the statutory language used in the original pension policies—pension gain-sharing and Cost of Living Adjustments (COLAS)—did not give “lawmakers the right to condition these pension enhancements.” Stating that “sacrifices required of state citizens’ should be shared by all citizens through use of general revenue mechanisms,” unions asked the Court to invalidate the Legislature’s repeal of the pension plan policies and pointed to taxpayers as the source of revenue to pay for it all.
The Attorney General’s brief, diving straight into the heart of the matter, challenged the unions’ attitude of entitlement toward a contract worth “billions of dollars in pension enhancements… based on a statute that explicitly barred any such right and said that it could be repealed at any time.” The brief goes on to point out that the unions’ argument “misstates both the facts and the law, asking this Court to ignore plain statutory language, invade core legislative powers, and cripple state and local budgets.” Stated plainly, unions demanded taxpayers’ pay for their outrageous pension plans with money that “could otherwise fund crucial needs from education to infrastructure repairs.”
Taking the side of legitimate legislative authority, Court stated:
“As in the companion case, we hold that the legislature reserved its right to repeal a benefit in the original enactment of that benefit and the enactment did not impair any preexisting contractual right . . . The legislature is allowed to condition its grant of pension enhancements using express language in the statutory provision that creates the right.”
With the conclusion of this lawsuit, two lessons stick out:
- Elected officials serving in the state Legislature do, in fact, have the authority to perform their lawful tasks as representatives of the people, i.e. budget and legislate.
- Unions, driven by what can only be described as self-serving ambition, are content to let taxpayers make financial sacrifices—and schools go unfunded—if it means their continued access to highly advantageous pension plans.