The Illinois Supreme Court has ruled unanimously that the pension reform legislation enacted by the legislature back in December of 2013 is unconstitutional:
Illinois’ supreme court has overturned the state’s 2013 pension reform law, which reduced pension costs and increased retirement ages, according to a copy of the decision, sending the state’s bonds lower.
The state has the worst-funded pension system and the lowest credit ratings of all 50 states and has contended that pension costs are making it difficult to fund services such as healthcare and public safety.
“There are no winners today,” said Ty Fahner, president of the Civic Committee of The Commercial Club of Chicago. “If there’s any good news, it’s that Chicago and Illinois are resilient, and we’ve responded to great challenges before.”
Illinois’ reform law, enacted in December 2013, reduces and suspends cost-of-living increases for pensions, raises retirement ages and limits salaries on which pensions are based.
which is exactly what I’ve been predicting all along. The question was never whether there was any wiggle room in the state’s constitution. The question has always been was the Illinois Supreme Court willing to carry water for our cowardly and feckless legislature. We now have our answer: they aren’t.
The ball is now in the legislature’s court. The elections are now safely behind them so they have some breathing room. Circumstances are much more difficult for the legislature now than they were back in late 2013. Now they know when the state’s constitution says “shall not decrease” and “enforceable” that’s exactly what it means. The state’s credit rating is worse than it was in 2013. And there’s a Republican governor, elected at least in part because he could be expected to oppose making the income tax increase, notionally imposed to put the state’s fiscal house in order. Whatever is done now will require a supermajority unless it’s something that fits into Gov. Rauner’s plans. His hand has just become stronger.
Update
At Crain’s Greg Hinz points out that the court’s decision is a blow to Mayor Emanuel’s and Gov. Rauner’s strategies, too:
Emanuel last year negotiated reductions in benefits with unions covering about half of city workers and is working with police and firefighters for further changes. But the language of today’s decision appears to allow no exception for “negotiated” reductions in benefits. Rather, the benefits are owed, as in any contract.
Rauner, in turn, has proposed shifting all current workers into a new system with reduced benefits. But the court decision suggests that a worker is entitled to accrue benefits at the old rate until he or she leaves the payroll.
The language of the justices’ ruling suggests that they could hoss trade with the unions, trading, for example, improved benefits of other kinds for pension reductions, but could not simply reduce benefits to something they’d be comfortable paying for.
The Court simply enforced the language in yhe IL constitution. pension reform requires a constitutional amendment.
Exactly. And yet, somehow, a New York Times columnist was arguing with me about it.