Moody’s: Janus win potentially credit positive for Illinois
A landmark case on worker freedom could have positive effects on Illinois’ fiscal health, according to a leading ratings agency.
In a 5-4 ruling in Janus v. AFSCME, the U.S. Supreme Court declared forced union fees violate the First Amendment rights of government workers. While the direct beneficiaries of the ruling are government workers who will no longer be forced to pay for speech with which they disagree, one ratings agency said the ruling will have positive effects on Illinois’ finances as well.
According to Moody’s Investors Service, the court’s ruling in the Janus case “could change how state and local governments set employee wages and pensions, resulting in a positive long-term impact on government finances.”
Irresponsible growth in public employee compensation and benefits has been straining Illinois finances for decades.
From 2005 to 2014, the average salary for AFSCME workers employed by the state of Illinois grew more than 40 percent, while median private-sector earnings remained virtually flat. In 2018, the cost of public employee retirement and health care benefits consumed more than 25 cents of every dollar in general funds spending.
This is an unsustainable trend.
According to the Governor’s Office of Management and Budget, growth in spending on government worker pensions and employee health insurance has far outpaced spending growth in every other area. From 2000 to 2018:
- Spending on pensions has grown 663 percent
- Spending on employee health insurance has grown 215 percent
- Spending on preschool through high school education has grown 65 percent
- All other spending has grown by just 16 percent
Despite these facts, AFSCME is currently demanding a number of budget-busting benefits in a contract dispute with Gov. Bruce Rauner. These include:
- Pay increases of up to 29 percent for state workers who are already the highest paid in the nation, when accounting for cost of living
- Platinum level health insurance subsidized by taxpayers, far more generous than private sector health insurance
- Overtime pay starting at just 37.5 hours per week
It is exactly these sorts of public policy positions taken by AFSCME that constitute the forced political speech at the heart of the Janus case. Moody’s sees Janus’ victory as a step toward fixing these underlying problems.