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Blue Model Blues
Illinois Supreme Court Nixes Pension Reform

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.

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  • Breif2

    Well whaddayaknow! It seems the constitution is a suicide pact…

  • Fat_Man

    It just means that any reforms will have to be in the form of a constitutional amendment approved by the voters.

  • LarryD

    “Experience keeps a dear school, but fools will learn in no other.”

    Passing that amendment was rank folly, and all of Illinois will learn the lesson. When the state has to deeply cut pay to current employes, power and light, services, everyone but the pensioners will be screaming for [state] constitutional change.

  • John Ellis

    The IL Supreme Court made this ruling last week, not yesterday.

  • ShadrachSmith

    Suddenly the clear meaning of a Constitution matters…who knew?
    It’s a strange, strange world we live in…

    • Dan

      “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean – neither more nor less.”

  • Otto

    A state always has the means to increase revenue. That is the only reality that matters now.

    • rheddles

      The voters always have the means to change the constitution. And move.

  • Andrew Allison

    As I’ve noted previously,it is the duty of judges is to uphold the law as written, not engage in social engineering. Illinois has a very simple choice: amend it’s constitution or become bankrupt. Either way, this victory will prove Phyric for the pensioners.

  • Curious Mayhem

    Eventually, the state will have to change its constitution. In the meantime, since states have no formal way to go bankrupt, we’ll see the “moral equivalent of bankruptcy,” such as bond ratings going all into the junk range or into default.

    While a US state cannot go legally bankrupt, it can default on one or more of its bonds. Keep this in mind, especially if you own Illinois debt. Default will happen a lot sooner than closing down state government.

  • Boritz

    “The blue model remains unshaken even as the state’s fiscal crisis deepens.”

    Just make this generic and you can re-use it forever: The blue model remains unshaken even as [absolutely any] crisis deepens.

  • qet

    This shows what happens when every kind of right people can imagine finds its way into a constitution, whether explicitly as in this case or by enlightened justices finding them hiding in penumbras. This provision wasn’t even added by amendment, but by adoption of an entirely new constitution in 1970, so it also shows what happens when constitutions are totally rewritten periodically to reflect the enlightenment of the times. The Illinois Framers of 1970 should look at the US Framers of 1787 and be ashamed.

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