In his decision, Belz said the biggest issue with the reform law is that it would take away previously promised benefits to pension system members, which the judge said went against Illinois law.

From Crain’s Chicago Business:

“The state of Illinois made a constitutionally protected promise to its employees concerning their pension benefits,” Belz said in his six-page ruling. “Under established and uncontroverted Illinois law, the state of Illinois cannot break this promise.”

The law sought to ease some of Illinois’ financial woes by scaling back how much the state would owe its employees once they retired by changing the terms of state employees’ pension agreements. They would receive fewer benefits than what they had been guaranteed at the time of their employment.

Further explanation from the Chicago Tribune:

Notice the phrase “pension rights.” In essence Belz is saying that whatever benefits were in force the first day of a worker’s employment are in force until the moment of his or her death.

The ruling says that the inability of the state to pay the pensions they promised to their employees should not become the problem of those employees. They are still owed their benefits, and the state must find a way to pay for them one way or another.

The state argued that changing these benefits is within its power under its goal of providing for the general welfare, says Crain’s–that allowing the pensions to remain unfunded by $100 billion is going to start hurting the rest of the state and its residents. Belz disagreed. He said protecting the pension benefits allowed for no “exceptions.” Crain’s reported that Rep. Joe Sosnowski said he would introduce a bill that would repeal the pension protection clause in the constitution next year.

The Tribune points out that though this is a bump in the road for champions of the law, getting the case in front of the Illinois Supreme Court as fast as possible can only mean good things for everyone involved. The quicker a final ruling is issued, the quicker the state can move forward in combatting its seriously underfunded pension crisis.

From the Tribune:

This ruling rebuffs backers of pension reform. But it also has a small upside: This state is one day closer to solving a pension crisis that it must solve — a crisis unsustainable and unrivaled in any other state. 

State Sen. Daniel Biss told Crain’s he agreed:

“Seven people will decide this at the end of the day,” said Illinois Sen. Daniel Biss, D-Skokie, one of the principal co-authors of the pension reform law. “It’s a victory for the state to get it to the Supreme Court faster. The state suffers from uncertainty. Ultimately what matters most is how we resolve this problem eventually.”

The state’s attorney general, Lisa Madigan, will argue in the law’s favor before the Supreme Court, and the Tribune says she’ll ask the Court to expedite the case, given the urgent nature of the situation.

Though a decision from the Supreme Court allowing the law to take effect would take some of the burden off the majorly squeezed pension system and might ease pressure on the state’s finances (and therefore taxpayers, says the Tribune), it’s probably not going to happen that way.

From the Tribune:

Of course, a Supreme Court ruling that nixes Belz and upholds the law would be the most prudent decision for taxpayers. But it doesn’t look likely the justices will rule that way. In a separate July case, the high court ruled that retiree health care benefits are constitutionally protected, even though they aren’t specifically mentioned in the constitution’s pension clause. So by extension, pension benefits, including built-in cost-of-living adjustments and early retirement-age promises, may well receive the same protection.

With Quinn’s last few weeks in office ahead of him, the governor still stands behind the idea that the law, of which he was a champion, will be found constitutional.

From Crain’s:

“This historic pension reform law eliminates the state’s unfunded liability and fully stabilizes the systems to ensure retirement security for employees who have faithfully contributed to them,” the governor’s office said in a statement. “We’re confident the Illinois Supreme Court will uphold this urgently needed law that squarely addresses the most pressing fiscal crisis of our time.”

Gov.-elect Bruce Rauner will also have his eyes trained toward the Supreme Court appeal. Earlier on Nov. 21, he said during a press conference in Springfield that he was looking to the courts for instruction in how to move forward with the pension laws. During the campaign, he said he felt the law was unconstitutional and that he favored moving to a 401(k)-style public pension program over time, while still paying current employees and retirees what they have been owed until now. There is no evidence, however, that such a proposal would be deemed any more constitutional than the law currently under scrutiny.

From the Tribune:

Much like he did during the campaign, Rauner has provided no details on how such an idea would work or how he believes it to be constitutional. He also has not said how his concept would reduce the state’s massive liability for the existing system, which is only 43 percent funded.

Just as important for Rauner is how public employee pensions fit into his still-undefined state budget goals, including whether he will ask taxpayers for more money after running for office on a tax cut pledge.

With Rauner and members of the General Assembly looking forward to getting the state’s finances in order once and for all, a decision from the Supreme Court will indicate in which direction new legislation should move–a complete overhaul, led by the new governor, or a second chance at a law similar to this one?

 

NEXT ARTICLE: Edgar recalls the last time we had a fiscal crisis and Democratic legislature

 

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