On Friday the Supreme Court has declared the Illinois pension law unconstitutional in an unanimous decision. According to the state’s constitution, once pensions have been established, they cannot be “diminished or impaired”. And so it shall be once again in Illinois.
The law was established by Governor Pat Quinn 18 months back and it was supposed to help Illinois cover a $ 105 million deficit that they had in retirement funds by lowering pension expenses. Quinn wanted pensions to remain at the amount they were in 2013, and renounce the annual cost-of-living increases.
Furthermore, he extended the legal retirement age for state employees and put boundaries on the amounts established to calculate pension benefits.
These are the measures that swayed the state employee unions to sue. And they actually won, back in November 2014, when the court declared that the measures were not in accordance with the state constitution.
This was when the state appealed, explaining that the motive behind the extreme measures that they instituted was the extreme economic necessity.
However, the Supreme Court ruled that the Illinois constitution bares the greatest weight in the matter and that keeping its directives clearly expressed in state law is of the utmost importance. Therefore, the deficit simply has to be corrected another way.
It is up to the Governor Bruce Rauner and the General Assembly to produce a new plan in order to mend the precarious financial state that Illinois currently finds itself in.
During his campaign last year Republican Bruce Rauner talked about the fact that the pension law was unconstitutional. Now, after the Supreme Court’s ruling, he may exercise his approach on the matter, so that he may introduce an entirely new amendment that “would allow the state to move forward on common-sense pension reforms”.
Unfortunately, his idea of common-sense pension reforms might not be in line with the union’s views. What he has proposed is that senior state employees be able to keep their current pension benefit plans up to a set date, when they would be shifted to the pension plan that is available to new employees.
However, the new employee pension plan offers less money than the one of old employees, which makes it unconstitutional as well. So therefore, Governor Rauner’s solution to Illinois’ financial deficit seems to be just a softened version of Governor Quinn’s.
Actually, it is much worse than Quinn’s law because Rauner intends to elaborate an amendment for the state’s constitution, that would allow him to make changes regarding the retirement benefits.
It is not expected though that the unions would stand for such a thing. Rauner’s plan might lead to both state and federal litigation and most importantly not solve Illinois’ financial problems in the process.
For now, the government workers’ and retiree’s unions are celebrating Friday’s victory against Governor Quinn and they are ecstatic to have saved “the hard-earned life savings” of nurses, teachers, policemen and firefighters for now.
It remains to be seen what the current Governor’s plan will imply exactly, but it remains of the highest importance that the new Illinois pension law be in accordance to the state’s constitution.
Image Source: wrex
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