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Illinois Sup Ct – State retirees can keep their annual compounded COLAs

Illinois Sup Ct – State retirees can keep their annual compounded COLAs

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.

Illinois Supreme Court rules landmark pension law unconstitutional

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.

Run. Don’t walk. And clutch your wallets with dear life.


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Ragspierre | May 8, 2015 at 4:25 pm

Poor, stupid lady. The fascist model INCLUDED unions as one of the three components. Not all unions, of course. The BIG, compliant unions were brought under the party umbrella. Just like the BIG, compliant businesses.

To think that idiot is teaching anyone anything in a monopoly school is simply tragic.

Ragspierre | May 8, 2015 at 4:29 pm

You can’t blame justices on the Illinois Supreme Court for following their constitution. That’s their job.

Maybe the people of Illinois can amend their constitution in time to avert disaster. If not, the unionists are going to be very, very surprised at how their money comes in, and goes right back out since they’re the only ones paying the freight. It’ll be interesting to watch.

    The Illinois Supreme Court’s decision will be overturned by a higher law. The law I am talking about goes by the name of: simple arithmetic. No unanimous court decision can overturn this law, no matter how many op-eds the NYT and WaPo furiously churn out denouncing it.

    The Illinois Constitution may very well mandate that 2 + 2 = 5, but no pension system operating on that principle is going to last long. Math is hard, which is why progressivism always fails.

    Estragon in reply to Ragspierre. | May 8, 2015 at 5:40 pm

    Either an amendment, which probably needs public approval, or perhaps bankruptcy. Which will be new ground for a state.

    I assume a special surtax on pensions would also be found unconstitutional.

      platypus in reply to Estragon. | May 8, 2015 at 5:53 pm

      A state is sovereign. I’m pretty sure that there’s no such thing as bankruptcy protection for a state.

      The only way out is through. Hell is coming up fast in the rear view mirror. Illinois will collapse and there is no way that Congress will even try to bail it out.

        Paul in reply to platypus. | May 8, 2015 at 6:16 pm

        You can bet that if it crumbles while Little Bam Bam is in office he will “invest” more of our children’s earnings in a bailout of his home state. Politicians from Illinois are an especially scummy lot. They have what, three past Governors in prison at the moment? Or is it four?

Phillep Harding | May 8, 2015 at 4:40 pm

Why is that provision in a Constitution?

    randian in reply to Phillep Harding. | May 8, 2015 at 4:54 pm

    California has a similar one. It has caused no end of problems.

    Anonamom in reply to Phillep Harding. | May 8, 2015 at 5:12 pm

    Because the people of the State of Illinois (and California) put it there.

    Why? Because we (in the general sense) are stupid. Because we vote with our feelings and not with our (dulled, empty) brains.

MouseTheLuckyDog | May 8, 2015 at 5:05 pm

It’s a shame that a Republican governor was just voted in.
A Democratic governor could have solved this by taxing the pensions of state employees.

    Estragon in reply to MouseTheLuckyDog. | May 8, 2015 at 5:41 pm

    I wonder if the protection extends to targeted taxes, too. The provision seems toothless if the state can just tax the COLAs to get around it.

inspectorudy | May 8, 2015 at 5:13 pm

The attitude of big government unions reminds me of the steam boat that ran out of coal. So to get home the crew started to burn the furnishings and then the wooden deck house. Finally they were down to the wooden hull and had to make a big decision. Do they stop the boiler and drift hoping to be rescued by another ship or do the burn the hull and hope to get home before they all drown. They all drowned! Illinois is one big steam boat.

    Eskyman in reply to inspectorudy. | May 9, 2015 at 3:19 pm

    Excellent example! Hope you don’t mind, but I’m pinching that story from you.

    I have just the place and people in mind… heh, they won’t like it AT ALL!

Bankrupted states should be reverted to territorial status shorn of representation in Congress until they are solvent. As Lenin stated, the path to communism is through trade unions… FDR opposed public employee unions as even he saw their danger. For the unions in Illinois this will be a Phyrric victory to be shared with the populous. They got what they wanted but they will not want what they got.

Midwest Rhino | May 8, 2015 at 6:24 pm

My understanding is part of the reason for the law reinforcing the “pension protection” was part of a some crazy back room deal where pensions were not being fully funded.

By law they are supposed to be fully funded, so I’m not sure how many we can put in prison for not doing that. But they got it both ways … Democrats got reelected making the promise to unions (reinforcing pensions) without facing the public outrage that would have come if they actually funded the pensions. They just ran up the no limit credit cards, made the minimum payments.

So the other shoe that needs to drop is to imprison or take pensions from all those that failed to uphold the law requiring full funding. Surely their is a ton of racketeering in there … this is Illinois after all. But it cost some $25 million just to get Blago.

Other than that, we just have to hope they and their spouses die early, due to a collapsing health care system perhaps. I guess we will be funding the gay spouses now as well.

The other way out is the same as with the national debt … let the feds print money like crazy and inflate out way out of debt. I’m thinking their COLA is fixed at 3% … might be wrong on that. But the COLA adjustment was just one step, didn’t really resolve the problem anyway.

Another choice, fire them all, give vouchers. Did the courts really say nothing can be changed after day one of their hiring? So we’re stuck with bad teachers for thirty years, that get their worthless Masters plus thirty with courses on social justice, and unless they have sex with a student, they can’t be fired, nor their pay path diminished? Then they live on 30 more years after 55, with a pension more than their salary. Good Gawd.

Look, this is real simple. The politicians in Illinois made promises to their employees, which included a pension with a COLA. This is pretty standard stuff an is found in private pension systems as well as public employee pensions. But, the politicians decided not to manage the fund well enough for it to be self supporting. This was known for decades, but the politicians did nothing to fix it. Now, all of a sudden they want to unilaterally change the agreement that they have with their current and past employees and cut those people’s benefits. Benefits which they earned during their tenure with the state. The politicians of Illinois were elected by the citizens of that state. And, if the politicians voted for a pension system which they can not afford, that is their problem, not that of the employees of the state, who have acted in good faith. And, it is the problem of the citizens, of the state, who voted for the politicians who put this pension system in place.

COLAs are supposed to be tied to the cost of living. If the cost of living goes up, then so does the COLA. If the cost of living does not go up, or goes down, then the COLA does not increase. If a person gets a fixed COLA, regardless of what the cost of living does from year to year, this is not a COLA, but an increase in the pension benefit or a raise.

    Midwest Rhino in reply to Mac45. | May 8, 2015 at 8:37 pm

    pretty much … but public unions suck because we know teachers, etc. pay union “thugs” to coerce golden deals. They also have a monopoly but have gotten around antitrust law as well. The quid pro quo of paying unions to coerce political favors is clear enough, but not pursued aggressively enough, as I see it. The deals are made between politicians and unions, and they later shrug and blame the voter.

    But bribery is still illegal, no matter how veiled it is. Will anyone go to prison over the John Doe investigations? All “political muscle” is illegal at its core, even when favors are bought carefully. But sure, every crime and wrong thing in America is because we didn’t elect the right people. Let’s not blame anyone but the voters. The Clintons are pure as the driven snow, by that logic.

    afaik, a COLA is a COLA, whether fixed or linked to CPI. It is not “a raise”, it set up as an adjustment for inflation.

      Eskyman in reply to Midwest Rhino. | May 9, 2015 at 3:29 pm

      OK, a COLA is tied to inflation; as inflation goes up, so does the COLA. Wunnerful, wunnerful, all is good… but.

      Does it matter that measuring inflation reminds me of counting hairs on a unicorn?

      Every time I go to the supermarket the prices seem to be way higher than the time before, but somehow… somehow! The gov’t tells us all with a straight face, and all the pundits seem to agree, that there really, really isn’t any inflation to speak of. Thus, no COLA increase.

      Can someone square this circle for me?

        Midwest Rhino in reply to Eskyman. | May 10, 2015 at 11:17 am

        you need to eat computer chips … those are getting cheaper. And free software instead of soft drinks. And don’t forget your hedonistic adjustments. 😉

    randian in reply to Mac45. | May 8, 2015 at 9:59 pm

    “Benefits which they earned during their tenure with the state”

    Irrelevant. If the payor can’t afford them then you don’t get them. That’s how it works in private industry.

      Midwest Rhino in reply to randian. | May 9, 2015 at 5:31 am

      They like to emphasize that they “earned them”, to obfuscate from golden deals where unfunded liabilities were piled up on future generations. Most of these teachers/gov’ workers spent their whole lives in the womb of government union protection, with any incompetence ignored, and advancement based on seniority not performance. For their unyielding Democrat machine support, they get to retire at 55 instead of 65 like the average pleb, with a golden unfunded retirement.

      Life is grand for the socialist parasite, till they kill the capitalist host. The Chicago Machine spawned Obama, and has not loosened its grip on Illinois, the ward bosses still deliver the vote.

      Once they turn us into Detroit, I guess they start seizing assets and property. The exodus has begun.

If you have taxable assets in IL, get them out now.

nordic_prince | May 8, 2015 at 11:21 pm

Been trying to escape Illinois (with an eye for Texas) for over a year now. Easier said than done ~

    Fiftycaltx in reply to nordic_prince. | May 9, 2015 at 10:12 am

    Well prince, no state income tax, business of all types are hiring, better hurry up, we are filling up fast.

    Move to Southwest Florida, a Red stronghold and counterweight to Miami. Democrat North Easterners retiring en mass are trying to turn the swing state blue. There are many perks to relocating. You can help stop the blue state pollution.

“The clause says public employee pensions are a contractual relationship with government and benefits cannot be diminished or impaired.”

…or what? The Public Employee will sack Rome for its failure to deliver its yearly tribute of gold and grain?!

When the Romans invented the word ‘Constitution’ it meant a system of checks and balances against popular and unilateral tyranny.

This clause (and the haphazard way people use ‘Constitution’ these days) reads more like the terms levied by a medieval army on the subjects of a conquered city.