What the idiots in our government — including the court system — don’t have the intellectual capacity to grasp is that no state constitution can guarantee the impossible. At the end of the day, any so-called “guarantee” will be as enforceable as our Founding Fathers’ vision of limited government as outlined in the U.S. Constitution. Anyone familiar with the Illinois example (click here to learn more) should alread understand this. From the Manhattan Institute:
Executive Summary
Seven states have specific clauses in their constitutions that protect public employee pensions: Alaska, Arizona, Hawaii, Illinois, Louisiana, Michigan, and New York. These seven states hold 20 percent of state governments’ total pension debt, and many billions more in local pension debt. These states should amend their constitutions to remove language guaranteeing pension benefits for public workers.
Constitutional amendments generally require a supermajority vote by the legislature and voter approval. All seven states have amended their constitutions in recent decades, in some cases dozens of times. The amendment process is worth pursuing, because protecting pensions in state constitutions is bad public policy. It limits the flexibility of bankruptcy negotiators, elevates the interests of workers over taxpayers, and prevents insolvent cities from discharging obligations that they cannot afford.
The Problem
Detroit’s recent bankruptcy filing has raised awareness not only of the burden associated with funding public pensions, but of how hard it can be for even an insolvent government to scale back unaffordable benefit promises. Efforts to cut pensions in Chapter 9 municipal bankruptcy, such as are now underway in Detroit, face steep challenges when a state’s constitution provides special protections for government worker pensions. Michigan’s constitution has such a provision, as do six other states.
Will pension benefits guaranteed by state constitutions continue in force even when they conflict with federal bankruptcy law? That’s the issue in Detroit, and the stakes are high, not only because fundamental principles of federalism are involved, but because of the billions of dollars in public pension debt held by the aforementioned seven states and their local governments. Still more important than the legal question, however, is the policy question of whether constitutional pension protections serve the public interest.
