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A Cook County
judge had ruled against the law in late July, saying it violates
pension protections in the Illinois constitution. The ruling was
a setback for Mayor Rahm Emanuel, who has repeatedly said he
will not raise taxes without pension reforms.
The Illinois Supreme Court set a calendar for lawyers' written
briefs and oral arguments on Thursday.
Cook County Circuit Court Judge Rita Novak rejected Chicago's
arguments that the 2014 law results in a net benefit because it
will save the municipal and laborers' retirement systems from
insolvency and that the law was backed by a majority of affected
labor unions.
Novak also took issue with the city's contention that it was not
legally on the hook to pay pensions.
The law requires Chicago and affected workers to make bigger
contributions to the pensions and replaces an automatic 3
percent annual cost-of-living increase for retirees with one
tied to inflation. Those increases are also skipped in some
years.
Pension payments are devouring bigger chunks of budgets for
Illinois and Chicago and both face crippling spending cuts or
big tax increases if those payments are not reduced. Illinois
has the worst-funded pension system among U.S. states and a $105
billion unfunded pension liability, while Chicago's unfunded
liability for its four systems is $20 billion.
Arlene Bohner, a Fitch analyst, said in July that a ruling by
the state supreme court tossing out the law "could very well
lead to a downgrade."
Representatives for the nation's third-largest city and for the
union representing city workers were not immediately available
for comment.
(Reporting by Mary Wisniewski; Editing by Lisa Lambert)
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