Late last week, the Illinois Supreme Court struck down a pension reform law, affirming an earlier ruling by a circuit court that found a bipartisan effort to address the pension system’s massive underfunding was unconstitutional. The Wall Street Journal:
“The financial challenges facing state and local governments in Illinois are well known and significant,” said Justice Lloyd Karmeier, writing for the entire court. “It is our obligation, however, just as it is theirs, to ensure that the law is followed.” […]“The court’s ruling confirms that the Illinois Constitution ensures against the government’s unilateral diminishment or impairment of public pensions,” said Michael Carrigan, president of the Illinois ALF-CIO, speaking on behalf of the We Are One Illinois coalition of unions.
Steven Malanga, writing at the time of the circuit court’s ruling, laid out the challenges facing Illinois very clearly:
Now, to pay off its retirement debt, Illinois needs more than $6 billion a year from taxpayers to make up for the skipped contributions to the pension system, along with more than $1 billion more to pay off its pension bonds. That represents more than one-fifth of the state’s general-fund budget. By contrast, states typically spend no more than 4 percent to 5 percent of their budgets on pensions.
This latest decision means that the state has two choices: slash services to the young and the poor to pay off the older, more affluent and whiter retired civil servants—or tax the economy into oblivion. Illinois’ Republican governor, Bruce Rauner, vowed to amend the Illinois constitution, “clarifying the distinction between currently earned benefits and future benefits not yet earned.”An amendment like that could help, but basically the state supreme court has ruled that in Illinois, the constitution is a suicide pact by design.