Government, retirees face off in Springfield

[March 13, 2015]  By: Mark Fitton  

SPRINGFIELD — The state’s high court on Wednesday will hear arguments in a case with a potentially huge impact on the state’s finances.
 At question is the constitutionality of the Legislature’s attempt to overhaul the state pension systems, which have unfunded liabilities of about $111 billion.

Supporters of the law, originally struck down by the trial court, say the pension debt is economically strangling the state as its payments, unchecked, will soon account for $1 of every $4 the state collects in general revenue.

The 2013 pension act obligated the state to increase its payments to the pension funds, but it also reduced cost-of-living allowances for retirees, which they argue diminished their pensions in violation of the state’s 1970 constitution.
The state concedes it has a contract with retirees, but argues the pension protection clause of the Illinois constitution was never intended to create a “super contract,” that prohibits it from exercising its sovereign powers to act on behalf of the state’s overall welfare or well being.

ep. Elaine Nekritz, D-Northbrook, one of the act’s architects, says the Legislature is constitutionally tasked with several demands, including adequately funding education and protecting the general welfare of the state.
“I think the question is whether those are completely subordinate to the pension clause or whether they are to be balanced with the pension clause,” Nekritz said. “I think I would argue, and the attorney general would argue, that they are to be balanced so that the state has the ability to meet all of the competing demands.”
Attorneys for the retirees say the state-funded retirement systems are outside the reach of sovereign or “police” powers because that’s exactly what the framers of the 1970 Illinois Constitution intended.

One of those attorneys, Aaron Maduff, has argued the framers included the pension protection clause with legitimate concern the state would be unable to meet its pension obligations because it had refused to fully fund pensions in the past.
“From the plaintiff’s view, all of us together, I think we all agree the pension clause is not subject to the police powers, that Public Act 98599 violates the pension clause and, as such, is unconstitutional,” he said.

The court is scheduled to hear arguments at 2:30 p.m. Wednesday. It’s decision, which could send the case back to the trial courts for further proceedings, could come at any time afterward, but many observers expect it will be well before the end of the state’s current fiscal year, which is June 31, given that the court granted the case fast-track status.

Illinois is struggling with a current-year deficit estimated at roughly $1.6 billion and fiscal year 2016 deficit estimated at $6.2 billion.
How the state will address budgeting is somewhat in limbo as the pension issue is weighed in the courts. And this year’s budget talks are already more high-stakes than usual given a new, Republican governor and a Democratically controlled House and Senate.

[This article courtesy of Watchdog.]