Wednesday, February 1, 2017

Illinois Attorney General Files Legal Action To Stop Pay For State Workers During Budget Impasse

In a move that may facilitate an end to Illinois’ long-running budget entanglement, by initiating either a shutdown or a compromise, on January 26, 2017, Illinois Attorney General Lisa Madigan filed a motion in St. Clair County Circuit Court seeking to dissolve a preliminary injunction that required the Comptroller to authorize payment of state employees’ full wages in the absence of a budget. The motion filed by the Illinois Attorney General asked the judge to terminate his order on February 28, 2017 to give the General Assembly and the Governor additional time to enact a budget before the injunction is dissolved.

As has been chronicled over the past two years, Illinois continues to operate without a budget to fund many services provided by vendors and grantees. For more than a year and a half, the State has operated under a temporary court order entered by the St. Clair County Circuit Court requiring the Comptroller to authorize payment to all state employees at their normal rates of pay despite the lack of enacted appropriations legislation covering state employee wages for Fiscal Years 2016 and 2017. The payroll process requires State agencies to send payroll vouchers to the Comptroller citing specific budget appropriations. But when the state started fiscal year 2016 without a budget, the agencies could not send their payroll to the Comptroller.

The temporary court order came about as a consequence of thirteen unions, including AFSCME, who sued the state in 2015 to ensure its members were paid even though there were not budget lines for it. In their action, the unions alleged that the failure to enact a budget to pay state employees at the rates specified in their collective bargaining agreements impaired the obligation of contract in violation of the Illinois Constitution. In support of that theory, the unions relied heavily on the appellate court’s opinion in State v. AFSCME, Council 31, 2014 IL App (1st) 130262 as support for their position that a failure to appropriate funds to pay employees in accordance with the terms of their collective bargaining agreements violates the constitutional guarantee against the impairment of contracts.

However, on March 24, 2016, the Illinois Supreme Court reversed the appellate court’s decision in State v. AFSCME, Council 31, 2014 IL App (1st) 130262, and in so doing squarely rejected the unions impairment of contract theory holding that pursuant to Section 21 of the Illinois Public Labor Relations Act (Act), collective bargaining agreements for state employees are subject to the General Assembly’s appropriations power. The court also expressly held that state employee wages in collective bargaining agreements are always contingent on legislative funding, and the failure of that contingency to occur cannot ‘impair’ AFSCME’s membership. State v. AFSCME, 2016 IL 118422. The Illinois Attorney General’s new legal action is essentially bringing the higher court’s ruling into the St. Clair Court’s order.

What’s more, the Illinois Attorney General’s action comes at an inopportune and tense time for much of the state’s workforce. AFSCME’s membership is currently voting on a strike authorization. That vote could result in the first-ever strike by State workers represented by AFSCME. The new legal action also comes as Senate President John Cullerton and Senate Republican Leader Christine Radogno are trying to facilitate a legislative compromise to the budget impasse. We will keep you apprised of developments as they become available. Also, please contact us with any questions you may have about this development.