Blue Model Blues
Illinois Supremes Scuttle Pension Reform

The Supremes have spoken: The Illinois state constitution is a suicide pact. Less than two years after invalidating an adjustment to state workers’ budget-busting healthcare benefits, the highest court in Illinois has ruled unconstitutional the City of Chicago’s last-ditch efforts to stabilize its woefully underfunded pension system. The Wall Street Journal reports:

The Illinois Supreme Court on Thursday rejected a plan to cut future retirement benefits and boost employee contributions for Chicago city workers, undercutting a pillar of Mayor Rahm Emanuel’s strategy to stabilize one of the nation’s most troubled pension systems.

The justices ruled the changes would violate the rights of city workers and retirees protected under the Illinois constitution. The Emanuel administration had argued that the changes came as part of an agreement under which the city would increase its annual contributions to two of the city’s four pension funds to ensure they remain solvent.

Our focus at Via Meadia is on politics and policy, not constitutional interpretation, but it appears that the meaning of the Illinois constitution is clear, or at least unlikely to change anytime soon: Both this ruling and the one that preceded it were unanimous, with the court’s three Republican justices joining its Democrats in ruling that the constitution’s “shall not be diminished or impaired” clause protects all current public employee benefits from any adjustments, even if the government is approaching insolvency. The ruling is a reminder of how deeply entrenched the blue model is in state and local government structures; even when reform-minded Democrats push through modest changes in deep blue jurisdictions, they stand to be derailed by longstanding constitutional provisions and a judiciary bound to uphold them. Amending the Illinois constitution is a daunting task, requiring a supermajority vote in both houses and supermajority approval in a statewide referendum.

The Windy City now needs to go back to the drawing board to figure out how to rectify its crumbling fiscal situation. Given that benefits for the unionized public sector are largely off limits, City Hall will likely need to raise taxes (thereby becoming even less attractive to business investment) or else scale back services like criminal justice, education and welfare (further eroding confidence in the government, especially among minority communities) or—perhaps most likely—continue more-or-less on its current course in the hopes that a federal bailout might be forthcoming.

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