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* Some background is here and here. From the Wall St. Journal…
An appeals court in Illinois has reinstated litigation seeking to block payments on $14.3 billion in municipal debt, saying the attempt to restrain borrowing in the country’s worst-rated state isn’t frivolous or malicious.
The appellate court said John Tillman, chief executive of the right-leaning Illinois Policy Institute, had put forth a legitimate claim in support of his theory that past bond sales by the state were impermissible.
* Law360…
An Illinois appellate court on Thursday resurrected a challenge to $14.3 billion in state bonds that a conservative think tank CEO claims were issued unconstitutionally, ruling that his complaint wasn’t frivolous or malicious and that a trial court shouldn’t have denied his petition to file it.
According to his petition for leave to file a taxpayers’ suit, Illinois Policy Institute CEO John Tillman claimed that bonds issued in 2003 and 2017 to purportedly help address massive pension and bill backlog obligations were not put toward a “specific purpose” for which the Illinois constitution allows it to enter into new long-term debt.
* From the opinion…
We repeat that we express no opinion on the merits of Tillman’s claims. We merely conclude for the purpose of this proceeding that Tillman should be permitted to file the complaint.
* From the governor’s office…
As has been noted previously, the bond issuance process under Illinois law includes several layers of review and sign off by bond counsel and Attorney General Lisa Madigan. The result is bonds that meet stringent legal standards, and these offerings met those standards. This lawsuit continues to be a tired tactic of the extreme right who continue to push their ideology over sound fiscal policy. This administration will continue to focus on the important work of acting responsibly to keep the state on stable fiscal footing.
Background…
Unlike other lawsuits, there is an extra step to file a taxpayer suit.
A plaintiff seeking to file a taxpayer suit must first file a Petition for Leave to File the lawsuit. Normally, that is a non-event and most suits are allowed to be filed.
Here the lower court ruled against Tillman and refused to allow the suit to even be filed. The Appellate Court disagreed. What that means is the suit can be filed — and will start at the first first step.
* Comptroller Susana Mendoza…
I strongly disagree with the ruling of the appellate court that reinstated former Governor Bruce Rauner’s #1 advisor and the Illinois Policy Institute CEO John Tillman’s irresponsible lawsuit, aimed at tanking Illinois’ finances - for the profit of named or unnamed hedge funds.
Bond counsel and the state Attorney General signed off on all these bonds. They were constitutional and we are confident Tillman will ultimately lose. While the fiscally responsible 2017 bond offering I championed saved taxpayers $4-$6 billion and served as a lifeline to businesses across Illinois, it hurt the profit margins of those who chose to bet against Illinois. Never bet against Illinois. Shame on them then, and shame on them today. This lawsuit is nothing more than garbage.
posted by Rich Miller
Friday, Aug 7, 20 @ 9:17 am
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Illinois GO spreads to MMD are going to increase until this is resolved.
Comment by Bond, James Bond Friday, Aug 7, 20 @ 9:24 am
“litigation seeking to block payments on $14.3 billion in municipal debt, saying the attempt to restrain borrowing in the country’s worst-rated state isn’t frivolous or malicious.”
Such poor writing. Why not say “attempt to restrain borrowing in Illinois?”
Comment by Mayo sandwich Friday, Aug 7, 20 @ 9:26 am
With the global pandemic and economic downturn, I had forgotten the IPI even exists until now.
Comment by ChicagoVinny Friday, Aug 7, 20 @ 9:29 am
Meh.
Tillman will get his day in court, grift off the idea that he gets his day in court, and then blame activist judges (huh?) for not looking out for taxpayers, blather, blather, “join us”… donate.
I’ll be interested in the ruling and it’s wording once both sides plea their side, so let’s have a case.
Comment by Oswego Willy Friday, Aug 7, 20 @ 9:38 am
==massive pension and bill backlog obligations were not put toward a “specific purpose”==
Sounds like a specific purpose to me.
Comment by All this Friday, Aug 7, 20 @ 9:39 am
Refinancing debt at a lower rate, to save taxpayers money, seems like a pretty valid “specific purpose” and a very reasonable use of borrowed funds. (But I’m no Constitutional lawyer.)
Comment by walker Friday, Aug 7, 20 @ 9:48 am
Not a fan of Tillman, but the appellate court was spot on in allowing the suit to move forward. The procedural step is not meant to be a steep hurdle for a taxpayer plaintiff to clear, it is there to prevent off the rails crazy suits. A suit that is not “frivolous on its face” can proceed. With that said, I don’t think it will survive a ruling on the merits.
Comment by Derek Smalls Friday, Aug 7, 20 @ 9:57 am
Illinois has to borrow in large part because low and middle income people have been carrying wealthy IPI types’ tax burdens for decades. These are the people who call others takers. They clearly don’t want to pay their fair share in taxes and would rather whack the poor and middle class or wreck the state.
Comment by Grandson of Man Friday, Aug 7, 20 @ 10:29 am
Speaking of using the legal system for personal and political gain…
Comment by Bertrum Cates Friday, Aug 7, 20 @ 10:45 am
@Grandson,
Yes, the horrible state of Illinois’ finances has nothing to do with unbalanced budgets, unsustainable pension promises and the inability of politicians to tax retirement income or a sales tax on services. /s
Comment by Bond, James Bond Friday, Aug 7, 20 @ 11:01 am
== and the inability of politicians to tax retirement income or a sales tax on services.==
You’re saying people in Illinois should pay more taxes. They will in order to pay for higher bond rates if Tillman prevails.
Comment by Mr. Green Genes Friday, Aug 7, 20 @ 11:19 am
== … With that said, I don’t think it will survive a ruling on the merits. ==
I agree.
Comment by RNUG Friday, Aug 7, 20 @ 11:21 am
The AC ruling notes several times it is not judging the merits of the case, simply that procedurally it can move forward. The lawsuit may well be garbage, but not frivolous on its face garbage.
Comment by West Side the Best Side Friday, Aug 7, 20 @ 11:55 am