Judge rules Illinois pension law unconstitutional

AP News
|
Posted: Nov 21, 2014 5:46 PM
Judge rules Illinois pension law unconstitutional

SPRINGFIELD, Ill. (AP) — An Illinois judge tossed out a landmark law Friday intended to fix the nation's worst government-employee pension crisis, ruling that the plan lawmakers adopted less than a year ago violates the state constitution's ban on reducing retirement benefits once they're promised.

The ruling will be appealed to the state Supreme Court, the Illinois attorney general's office said.

The pension patch that legislators and Democratic Gov. Pat Quinn OK'd last December was intended to make up for years of government underfunding that had left the state's retirements accounts roughly $100 billion short of what they need to cover benefits promised to employees.

But Sangamon County Circuit Judge John Belz didn't buy the argument that in times of crisis, the state's sovereignty — essentially, its "police powers" — allow it to impose extraordinary measures.

"The state of Illinois made a constitutionally protected promise to its employees concerning their pension benefits," Belz wrote in a six-page opinion. "Under established and uncontroverted Illinois law, the state of Illinois cannot break its promise."

The milestone law, years in the making, slightly reduced employees' retirement-fund contributions, but also reduced benefits — the part the lawsuit successfully argued is barred by the Illinois Constitution, which protects against action to "impair or diminish" pension allowances.

Both Quinn, who made the pension overhaul a cornerstone of his last term of office, and Republican Bruce Rauner, who defeated Quinn in this month's election, urged the high court to decide the matter quickly.

Rauner issued a statement calling the decree "the first step in a process that should ultimately be decided by the Illinois Supreme Court," while Quinn spokesman Grant Klinzman proclaimed confidence that the court "will uphold this urgently needed law that squarely addresses the most pressing fiscal crisis of our time."

Attorney General Lisa Madigan's office said it will ask for an expedited appeal "given the significant impact" a ruling will have on the state's finances.

Belz suggested in September that he wanted the issue moved on to the high court expeditiously, given a separate ruling by the court in July that it's unconstitutional for the state to require state retirees to pay part of their pension receipts toward health insurance.

Separately on Friday, Sangamon County Associate Circuit Judge Steven Nardulli began the process for refunding more than $60 million to the pensioners.

This all gives Rauner an even bigger headache when he takes office in January. He's pledged to roll back a temporary Quinn tax increase but must deal with state spending projections for the first half of the year based on revenue from extending the tax hike, as Quinn proposed.

The state had urged Belz to rule that pensions are a "contractual agreement," which the government may modify, particularly in a crisis. It said the state's "reserved sovereign powers" trumped constitutional language.

"Those 'police powers' do not extend to taking pension benefits away from people where those benefits have been earned," said John Myers, one of the plaintiffs' attorneys. "The state needs to balance its budget, due to alleged fiscal emergencies, it has to find some way other than taking money out of the pockets of retirees."

Rep. Elaine Nekritz, the Northbrook Democrat who was a major architect of the pension fix and an early advocate of the "emergency powers" idea, said an adverse Supreme Court ruling does not eliminate the General Assembly's options to cut the pension debt, but would "make the choices we have to make even harsher."

In that event, "People who are paying taxes in 2045 will still be paying debts incurred in 2014," Nekritz said. "That's a policy choice we were trying to avoid."

___

Contact John O'Connor at https://twitter.com/apoconnor

Contact Kerry Lester at https://twitter.com/kerrylester