Illinois Supreme Court speeds up pension reform law appeal

Reuters News
Posted: Dec 10, 2014 4:55 PM

CHICAGO (Reuters) - The Illinois Supreme Court on Wednesday fast-tracked the state's appeal of a trial court ruling that found a new law aimed at easing the state's huge pension burden unconstitutional.

The court ordered public labor unions and retiree groups challenging the law and the state to file their briefs in January and February with oral arguments to be scheduled in March. Illinois Attorney General Lisa Madigan had asked the court last week to speed up the appeal process.

The state asked for oral arguments as early as Jan. 22 and no later than March 10 to enable Illinois' upcoming budget to incorporate about $1 billion in cost-savings under the law, or adequate spending cuts or tax increases to offset those savings.

The pension reform law was supposed to go into effect on June 1 but was put on hold by Sangamon County Circuit Court Judge John Belz in May pending his Nov. 21 ruling in five consolidated lawsuits. The state's new fiscal year begins July 1 and the legislature usually passes a budget by May 31.

The law's opponents asked the supreme court on Tuesday not to speed up the case.

Illinois has the worst-funded state retirement system in the country, and its unfunded pension liability hit $104.6 billion at the end of fiscal 2014. No U.S. state has a lower credit rating than Illinois.

The reform law, which was enacted in December 2013, reduces and suspends cost-of-living increases for pensions, raises retirement ages and limits salaries on which pensions are based.

Employees contribute 1 percent less of their salaries toward pensions, while contributions from the state, which has skipped or skimped on its pension payments over the years, are enforceable through the Illinois Supreme Court.

In his ruling last month, Belz rejected Illinois' arguments that pensions could be cut to protect the public welfare in an emergency, including the state's precarious financial situation. He concluded that the state could not go back on a promise protected by a provision in the Illinois Constitution prohibiting public worker pensions from being impaired or diminished.

(Reporting By Karen Pierog; Editing by Bernard Orr)