The Illinois Supreme Court ruled yesterday that the state’s attempt to make retirees pay a bit of their healthcare premiums was unconstitutional:
The 6-1 decision centers around a 2012 law that allowed the state to charge retired workers for health care insurance premiums, which many did not have to pay depending on how long they worked for the state.Retired workers sued, arguing the changes violated a provision in the state constitution that declares pension benefits “shall not be diminished or impaired.”
The ruling’s sweeping language, which held that that clause protects all retirement benefits, appears to put other planned pension reforms in jeopardy, too.Illinois is $175.7 billion in the hole on pensions and other debt, and the situation is getting worse. Chicago, which is also affected by this ruling, owes $20 billion. Now that these reforms, which were modest to begin with, are no longer viable, options are few and far between.The Illinois court majority, which included all three Republican Justices, acknowledged the fiscal crisis, but held that the Court was bound by the plain language of the Illinois Constitution, saying, “We have concluded that the provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.”What comes next? Neither Chicago nor Illinois has the money to keep its promises. Those of us who have cheered the creative destruction underway in blue model states and cities would do well to remember how entrenched and self-reinforcing that model can be. Even grim fiscal realities like these, it seems, don’t necessarily shake its foundation.