Court ruling is a real killer
No escaping the consequences of a high court ruling that puts public employees in driver's seat.
The Illinois Supreme Court didn't say so specifically, but the import of two recent decisions (one by the high court itself and the other by a trial judge citing precedent) is clear: the Illinois Constitution is a political and financial suicide pact in which all state citizens are a party.
Ten days ago, Cook County Circuit Judge Mary Mikva blocked citizen initiatives aimed at creating competitive legislative elections or putting limits on how long our legislators can serve. The decision leaves the state's powers-that-be free to pursue the policies that have led to financial ruin and laughingstock status.
Last week, the Illinois Supreme Court held that legislative efforts to rein the bankrupting costs of supporting public retirees are unconstitutional, a decision that ultimately will devastate all levels of government in Illinois.
Gov. Pat Quinn and Attorney General Lisa Madigan tried to wish away the fallout from the court's decision, arguing the court's 6-1 ruling that bars the state from requiring retirees to pay something for their health insurance does not bode ill for controversial pension legislation that slows future increase in benefits.
Madigan spokesman Maura Possley contends the ruling "has no direct impact on the pension reform litigation arguments" because the "arguments in the pension reform litigation are different than the ones in this health care case." Gov. Quinn expressed confidence "the courts will uphold this critical law that stabilizes the state's pension funds while squarely addressing the most pressing financial crisis of our time ..."
Those statements are fine as far as they go, which isn't very far. But public union chief Henry Bayer wasn't just whistling Dixie when he issued a public statement crowing about the important precedent the court set in its interpretation of the state constitution's pension clause.
"Retirement security, including affordable health care and a modest pension, cannot be revoked by politicians," Bayer said.
While acknowledging Bayer's likely accurate interpretation of the court ruling, there's a huge disconnect between his rhetoric about "affordable health care and a modest pension" and reality.
The lawsuit in which the court ruled involved a law requiring state retirees with at least 20 years of service to pay for health insurance. Effective July 1, 2013, retirees were required to pay 1 percent of their pension benefits if they were eligible for Medicare and 2 percent if not eligible for Medicare for their health insurance. On July 1 of this year, those rates jumped to 2 percent with Medicare and 4 percent without Medicare.
Under the ruling, the retirees will continue to receive health insurance from the state at no cost. That's zero, rien, nada, zippo — absolutely nothing. "Affordable" health care? Darn right.
Who else but public employees get such a sweet deal? That kind of unaffordable generosity is unheard of in the private sector.
A state trial judge had ruled that retirees could be required to pay for their health insurance because it is a separate benefit from pensions. But the high court found that under the "non-diminution" pension clause what was once provided at no cost cannot be withdrawn no matter what the consequences are. At least that's what it appears to say.
In that context, the controversial legislation passed late last year by the Democratic-controlled General Assembly and signed by Gov. Quinn would appear to be dead on arrival in the state court. A trial judge is considering a legal challenge to the law, and the first place he'll look for guidance is the high court's decision on the health insurance issue.
The Quinn legislation did not reduce pension benefits retirees currently receive or benefits current state workers already have earned. However, it did impose limits on the growth of benefits not yet received or earned, reducing annual 3 percent cost-of-living increases, raising a shockingly low retirement age and putting a limit on the maximum pension an employee can earn.
Those changes would appear to be out the window as would revisions to the badly underfunded City of Chicago pension plans. Downstate mayors who also face the impending financial collapse of their municipal pension can look forward to no easing of the pressure their communities will face.
This impending conflagration can all be laid at the feet of elected officials who negotiated overly generous retirement benefits for public employees, often buying political support today from powerful unions while pushing the costs off until tomorrow. At the same time, they refused to properly fund the system they had while regularly agreeing to pension sweeteners, early retirement programs and a host of corrupt bargains that allowed employees to double- and triple-dip. They even went so far as to allow politically connected private-sector employees to be covered by public pension plans.
The lack of flexibility the court's opinion institutionalizes will require that public funds that could go to support education, roads, law enforcement, mental health and a host of other core public functions must be diverted to paying public pension obligations. That could mean a series of tax increases that will encourage people to leave Illinois, discourage others from coming to Illinois, undermine the state's economic prospects and pretty much make the current epic disaster an ever bigger one.