2011 Pension Reform thrown out – Illinois taxpayers will pay the price, and soon.
Hey, remember when I wrote in February 2011 how state employees accused Scott Walker of being Hitler because he wanted to scale back state employee unions? First They Came For The Right To Retire After 30 Years On Full Salary With COLAs.
Welcome to Illinois, where in 2011 the legislature made a similar “Hitlerian” move to protect the State from fiscal oblivion by scaling back annual compounding of retiree Cost of Living Adjustments and other retiree perks as part of a reform package.
Those perks, not available in the private sector, were crushing the state budget.
The Illinois reform was just thrown out by the Illinois Supreme Court. The Opinion is here.
The Illinois Supreme Court on Friday unanimously ruled unconstitutional a landmark state pension law that aimed to scale back government worker benefits to erase a massive $105 billion pension debt, sending lawmakers and the new governor back to the negotiating table to solve the pressing financial issue.
Republican Justice Lloyd Karmeier, writing for the entire court, said the law violated provisions of the 1970 Illinois Constitution known as the pension protection clause. The clause says public employee pensions are a contractual relationship with government and benefits cannot be diminished or impaired.
The December 2013 law called for curbing automatic and compounded annual cost-of-living increases for retirees, extending retirement ages for current state workers and limiting the amount of salary used to figure pension benefits.
Needless to say, labor unions applauded the ruling:
In its ruling, the court found that state worker retirement benefits that are promised on the first day of work cannot be later reduced during their term of employment. But it is unclear that a change in the constitution, a difficult prospect in the legislature, could even be applied to existing state workers and would be likely to result in years of litigation and could involve both state and federal courts.
A coalition of unions that represent government workers and retirees applauded the ruling.
If I were in Illinois, I’d get out as soon as possible:
An Illinois Supreme Court ruling that struck down a pension reform law on Friday could have just opened the door even wider to the prospect of deep cuts to services and new taxes for Illinois residents.
With just three weeks left until lawmakers have to pass a balanced budget, legislators now have even more political cover to raise taxes and cut spending following the high court’s decision that said it was unconstitutional for the state to pare back promised pension benefits for state employees.
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