Court rejects lawsuit over state use of government bonds

[May 22, 2021]  By SARAH MANSUR
Capitol News Illinois
[e-mail]

SPRINGFIELD — The Illinois Supreme Court threw out a lawsuit Thursday that was brought by the head of a libertarian think-tank that challenged the state’s use of bonds to pay back state debt.

The decision marks the end of the legal battle initiated by Illinois Policy Institute Chairman and CEO John Tillman against the state’s use of more than $14 million in bonds to repay pension obligations and other state debt.

Tillman claimed the state laws in 2003 and 2017 authorizing the bonds were unconstitutional because the bonds were not issued for “specific purposes,” within the meaning of the state constitution.

The Illinois Constitution’s revenue article contains a section that provides the state can incur debt for “specific purposes.” Tillman argued that, within the meaning of this constitutional provision, “specific purposes” refers exclusively to projects dealing with capital improvements, such as roads, buildings, and bridges.

He asked the court to declare the bonds invalid and block the state from making any future payments on them.

The court ruled unanimously that Tillman could not bring this case because of his delay in filing his 2019 lawsuit, years after the 2003 and 2017 laws issuing the bonds were passed.

The ruling relies on the doctrine of laches.

Laches refers to the defense used against a party “who has knowingly slept upon his rights and acquiesced for a great length of time,” the opinion states. The second element of laches is whether the party being sued would suffer “prejudice” as a result of the delay in filing the action.
 

The court found both elements were met to satisfy the laches doctrine in this case.

“(Tillman) offers no excuse for why he waited 2 years (in the case of the 2017 bonds) and 16 years (in the case of the 2003 bonds) to file his action challenging the constitutionality of the bonds,” the court wrote in its opinion.

The justices also decided that it is “patently obvious that the State will suffer some prejudice if relief is granted at this extremely late stage.”

“Enjoining the State from meeting its obligation to make payments on general obligation bonds will, at the very least, have a detrimental effect on the State’s credit rating,” the opinion states.

In a written statement, Tillman said he is disappointed in the Illinois Supreme Court’s ruling and is evaluating his options as to how to proceed from here.

“In the interim, I continue to be profoundly concerned about Illinois’ reckless debt accumulation,” he said in the statement. “All Illinoisans should care about this. If the state doesn’t tackle pension reform now, it will slide into a fiscal crisis beyond repair that will threaten not only taxpayers and the people who depend on government services, but also people who are counting on their public-sector pension in retirement.”

In her own statement, Illinois Comptroller Susana Mendoza said the court’s decision was correct because the bonds were constitutional.

“While the fiscally responsible 2017 bond offering that I championed saved taxpayers $4 to $6 billion in late payment interest penalties and served as a lifeline to businesses across Illinois, it hurt the profit margins of those who chose to bet against Illinois. They gambled and lost. Their irresponsible game is over,” Mendoza said in the statement.

A spokesperson for Pritzker said in a statement that the governor’s administration is pleased with court’s decision that ends Tillman’s “frivolous” lawsuit.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.