Rauner looks to Washington for the power to change pension benefits

Oct. 21--Stymied by a Democrat-controlled General Assembly and still in a contract dispute with the largest state employee union, Republican Gov. Bruce Rauner is looking to Washington for help advancing his agenda to weaken the influence of organized labor in Illinois.

He's lobbying Congress to give states like Illinois the power to change public employee pension benefits, which he argues are overly generous because of a "corrupt bargain" between politicians and union negotiators. And the governor is hoping to get legal victories over unions at the U.S. Supreme Court, where the recent appointment of a new conservative justice could tilt decisions in his favor.

The focus on D.C. allows the first-term governor to show supporters he has a plan for delivering on the promises he made as a candidate despite losing a two-year budget battle with Democrats over the summer. And it comes as Rauner prepares for a re-election campaign in which he needs to win back his conservative base after his approval of controversial abortion and immigration legislation left many of them angry.

Much of the major legislation Rauner signed this year -- an overhaul of the state's education funding system and a boost in spending on schools; a bill protecting immigrants from federal deportation efforts; an expansion of taxpayer-funded abortions; and a new law allowing automatic voter registration -- are measures that Democrats first pushed. Left undone is his promise to get the state's financial house in order, which hinged in part on cutting the cost of Illinois' unionized government workforce.

Speaking to a gathering of business leaders in late September, Rauner said he was turning to Washington for help with one part of that effort -- getting control of Illinois' massive pension debt, which stands at about $130 billion and ranks among the worst in the nation.

"We need the help. We need the help because the system's rigged. Can't change it, can't fix it," Rauner said.

As a candidate and as governor, Rauner had proposed cutting pension costs by transitioning workers to less generous benefit packages or 401(k)-style retirement plans. But past attempts to cut retirement costs have run up against legal problems. The Illinois Constitution stipulates that benefits cannot be "diminished or impaired" once they are bestowed to workers, and the state Supreme Court has stood by those words.

The governor thinks Congress can release the state from that restriction by passing a law that would give states permission to come up with cost-saving changes to their pension programs. The option would be available to states only after they had established that spending money on workers' retirement plans is hampering other essential services.

After conducting hearings, a state would have to propose its changes to a court, which would hear arguments from people who would be affected. Options could include reducing benefits provided under a pension plan, changing the way benefits are calculated or limiting the number of pensions a person can collect.

"There's so many things that we can't touch because we're unreasonably hamstrung," Rauner said. "And the federal government can say, 'No, federal restructuring law supersedes the state restrictions, Congress is freeing up states to restructure their pensions as they need to, as they see fit.'"

The idea comes from conservative policy circles but hasn't been written into legislation that's been seriously considered in Washington. Critics like Democratic Illinois Senate President John Cullerton said the idea raises "serious constitutional concerns."

"Frankly, I find it troubling that a governor would turn to Congress and Donald Trump to try to invalidate his own state's constitution," Cullerton said. "If it starts with workers' retirement security, where would it stop?"

Rauner said his administration lawyers are "talking to everybody in the federal government" about the idea. He said last month that he hoped to see it included "with the tax overhaul" that's been anticipated as the next big issue to be taken up in Washington.

Even if the appeal to the federal government goes nowhere, it allows Rauner to tell voters he has a plan for dealing with the pension problem.

Asked Friday if he had given up on trying to work with the General Assembly to solve the pension shortfall, Rauner said he thought "the true solutions for reforming pensions will come from the state level."

"The idea for the federal is just to allow states to actually structure their pensions the right way," Rauner said. "We have a lot of spiking, and two and three pensions, and some not good, not fair structure inside there that's costing a lot of money and taking money away from the honest state employees who do not have a rigged deal. So we need to make some changes."

Even as he blames the state's pension woes on unions, the governor is looking to the U.S. Supreme Court for help diminishing their power. Rauner got a boost from the court last month when the justices agreed to hear a case he initiated when he first took office in 2015.

That case centers on government employee unions, which collect what's known as "fair share" fees from nonmembers. The thinking behind the fees is that all employees should pay for the cost of negotiating contracts and handling employee grievances and other services provided by unions. Rauner wants to put a stop to the fees, contending that requiring nonmembers to contribute financially to a union is a violation of their rights to free speech.

A decision in that case is expected next year. A similar case was heard by the Supreme Court in 2016 and resulted in a 4-4 tie vote after Justice Antonin Scalia's death left the bench with just eight members. Justice Neil Gorsuch, Trump's new appointee to the court, could hold the tie-breaking vote.

A second, lesser-known case is also making its way through the legal system, and Rauner hopes it, too, will land at the high court.

That case involves an attempt by the Lake County village of Lincolnshire to enact what's known as a right-to-work ordinance -- a measure that would prohibit private sector employers from entering into agreements with unions that require workers to join or pay fees as a condition of employment. Some Midwestern states have enacted such laws in recent years, and Rauner says the shifting landscape has left Illinois at a competitive disadvantage to its neighbors. He's contended that individual communities should have the freedom to decide if they want to require union membership.

A federal district court struck down the Lincolnshire ordinance this year, ruling that only states have the power to enact laws prohibiting mandatory union participation. The village is appealing the ruling with the help of the Liberty Justice Center, which is an affiliate of the Illinois Policy Institute. The group is a libertarian-to-conservative think tank to which Rauner donated at least $500,000 before he became governor and from which he hired several key staff members over the summer.

"We're in federal court right now to make sure that states can have their local governments, counties and cities, decide for themselves their labor regulations," Rauner told the Illinois Chamber of Commerce in a late September speech in which he tried to reassure business leaders he can still accomplish the pro-business agenda he campaigned on. "If we can free this up with local control, I promise you, we can have hundreds more companies coming to the state of Illinois because there are thousands of businesses around America that won't go to a closed-shop state, they just won't even consider it."

Rauner told reporters he hopes the case will make its way to the U.S. Supreme Court. It's unknown how the justices would rule, but Gorsuch has a track record of siding with business interests.

Closer to home, the governor is in the midst of a court battle with the American Federation of State, County and Municipal Employees, the largest public worker union in Illinois, over a contract to replace the one that expired in 2015. Rauner tried to impose his own contract terms on the union late last year, but a court put that process on hold while the case makes its way through the legal system. Oral arguments haven't been scheduled for that case yet, meaning it is likely to continue into next year.

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