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* Let’s go through the decision together…
The solution proposed by the [state Constitution] drafters and ultimately approved by the people of Illinois was to protect the benefits of membership in public pension systems not by dictating specific funding levels, but by safeguarding the benefits themselves… The purpose of the clause and its dual features have never been in dispute
* Clear cut…
The first issue, whether Public Act 98-599’s reduction of retirement annuity benefits violates this State’s pension protection clause, is easily resolved. The pension protection clause clearly states: “[m]embership in any pension or retirement system of the State *** shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” (Emphasis added.) Ill. Const. 1970, art. XIII, § 5. This clause has been construed by our court on numerous occasions, most recently in Kanerva v. Weems, 2014 IL 115811.We held in that case that the clause means precisely what it says: “if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired.”
This construction of article XIII, section 5, was not a break from prior law. To the contrary, it was a reaffirmation of principles articulated by this court and the appellate court on numerous occasions since the 1970 Constitution took effect. […]
Retirement annuity benefits are unquestionably a “benefit of contractually-enforceable relationship resulting from membership” in the four State-funded retirement systems. Indeed, they are among the most important benefits provided by those systems. If allowed to take effect, Public Act 98-599, would clearly result in a diminishment of the retirement annuities to which Tier 1 members of GRS, SRS, SURS and TRS became entitled when they joined those systems. As described earlier in this opinion, the new legislation directly reduces the value of retirement annuities for those members in no fewer than five different ways. While we presume statutes to be constitutional and must construe enactments by the legislature so as to uphold their validity whenever it is reasonably proper to do so (Wilson v. Department of Revenue, 169 Ill. 2d 306, 310 (1996)), there is simply no way that the annuity reduction provisions in Public Act 98-599 can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause. Those provisions contravene the clear requirements of article XIII, section 5, as set forth in the provision’s plain and unambiguous language and construed by the legion of cases we have just discussed. In enacting the provisions, the General Assembly overstepped the scope of its legislative power. This court is therefore obligated to declare those provisions invalid.
* Police powers…
That the annuity reduction provisions of Public Act 98-599 violate the pension protection clause’s prohibition against the diminishment of the benefits of membership in a State-funded retirement system is one the State has now all but conceded. After this court reaffirmed in Kanerva v. Weems that the pension protection clause means precisely what it says, the State shifted its focus to an argument it did not raise and we did not consider in Kanerva. The State’s position now rests on its affirmative defense that funding for the pension systems and State finances in general have become so dire that the General Assembly is authorized, even compelled, to invoke the State’s “reserved sovereign powers,” i.e., its police powers, to override the rights and protections afforded by article XIII, section 5, of the Illinois Constitution in the interests of the greater public good. This argument must also fail.
The circumstances presented by this case are not unique. Economic conditions are cyclical and expected, and fiscal difficulties have confronted the State before. […]
While these principles sound expansive, legislation impairing contracts has actually been upheld against contract clause challenges only rarely. George D. Hardin, Inc. v. Village of Mount Prospect, 99 Ill. 2d at 104. When the legislation has been directed at reducing pension benefits of State employees, this court has expressly held that it is “not defensible as a reasonable exercise of the State’s police powers” and declared it invalid under the contracts clause, as well as for other reasons. […]
In addition, because the state’s self-interest is at stake whenever it seeks to modify its own financial obligations, the United States Supreme Court has made clear that it is not appropriate to give the state’s legislature the same deference it would otherwise be afforded with regard to whether the impairment is reasonable and necessary to serve an important public purpose. “A governmental entity can always find a use for extra money,” the Court observed, “especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.” […]
The State protests that this conclusion is tantamount to holding that the State has surrendered its sovereign authority, something it may not do. The State is incorrect. Article XIII, section 5, is in no sense a surrender of any attribute of sovereignty. Rather, it is a statement by the people of Illinois, made in the clearest possible terms, that the authority of the legislature does not include the power to diminish or impair the benefits of membership in a public retirement system. This is a restriction the people of Illinois had every right to impose. […]
Under the State’s reasoning, the only limit on the police power would be the scope of the emergency. The legislature could do whatever it felt it needed to do under the circumstances. And more than that, through its funding decisions, it could create the very emergency conditions used to justify its suspension of the rights conferred and protected by the constitution. If financial markets were rational, this prospect would not buoy our economy, it would ruin it.
* Man, is this ever a strong statement…
The financial challenges facing state and local governments in Illinois are well known and significant. In ruling as we have today, we do not mean to minimize the gravity of the State’s problems or the magnitude of the difficulty facing our elected representatives. It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. How we respond is the measure of our commitment to the principles of justice we are sworn to uphold.
* Severability…
We come, then, to the third and final issue presented by this appeal: are the invalid annuity reduction provisions of Public Act 98-599 severable from the remainder of the statute? […]
Among the 39 sections deemed “inseverable” are some of the specific provisions which impermissibly reduce retirement annuity benefits in violation of the pension protection clause. These include sections 2-119.1(a-1), 14-114(a-1), 15-136(d-1), and 16-133.1(a-1) (40 ILCS 5/2-119.1(a-1), 14-114(a-1), 15-136(d-1), 16-133.1(a-1) (West Supp. 2013)), which adversely affect the value of annual annuity increases. Under the express terms of section 97 of the Act itself, all 39 of the “inseverable” provisions must therefore fall with the provisions we have declared unconstitutional. When one eliminates those 39 provisions along with all the other annuity-reducing portions of the law that are void and enforceable under the pension protection clause, Public Act 98-599 all but evaporates.
Severability principles would doom the statute in any case. Under Illinois law, severability clauses are not conclusive. That is because a court’s authority to eliminate invalid elements of an act and yet sustain its valid provisions derives not from legislative fiat, but from powers inherent in the judiciary. The practice of holding statutory provisions severable from those that are found to be invalid originated in the courts long before severability clauses were adopted by legislatures. Although the use of severability clauses has now become common practice, we have noted that they are regarded as little more than a formality. […]
Applying these principles to the case before us, there can be no serious question that, with invalidation of those provisions of Public Act 98-599 which reduce the retirement annuities Tier 1 members of the GRS, SERS, SURS and TRS are entitled to receive, the entire statute must fall. As noted earlier in this opinion, the legislation’s proponents described its numerous provisions as “all part of an integral bipartisan package.” The overarching purpose of the law was to shore up State finances, improve its credit rating and free up resources for other purposes by reducing, i.e., diminishing, the amount of retirement annuity benefits paid to Tier 1 members of GRS, SERS, SURS, and TRS, particularly annual annuity increases, which the speaker of the House of Representatives himself referred to as the chief cause of the financial problems the Act was intended to address. 98th Ill. Gen. Assem., House Proceedings, Dec. 3, 2013, at 7 (statements of Representative Madigan). The annuity reduction provisions are therefore not merely central to the statute, they are its very reason for being. Without them, the legislature would not have enacted the law at all. To leave those remaining provisions standing once the core sections are stripped away would, under these circumstances, yield a legislation package that no longer reflects the legislature’s intent. The circuit court was therefore correct when it concluded that Public Act 98-599 is void and unenforceable in its entirety
No dissent was filed.
Done. Toast. Over.
posted by Rich Miller
Friday, May 8, 15 @ 10:35 am
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YES!
Comment by Anonymous Friday, May 8, 15 @ 10:37 am
Down goes Frazier! Down goes Frazier!
Comment by Name Withheld Friday, May 8, 15 @ 10:39 am
Hurray!
Comment by Ex-Rutan-exempt Friday, May 8, 15 @ 10:40 am
The rule of law wins. No matter how terrible you think public unions are, striking the state constitution would make us a banana mini-republic. Now pass a law to let CPS go bankrupt.
Comment by lake county democrat Friday, May 8, 15 @ 10:43 am
tl;dr - The Illinois Constitution isn’t a suggestion.
– MrJM
Comment by MrJM Friday, May 8, 15 @ 10:43 am
Wait, the daily “right to work” roundup isn’t the most important news of the day?
Comment by Walter Reuther's Son Friday, May 8, 15 @ 10:43 am
As expected. Good news.
Comment by illinoised Friday, May 8, 15 @ 10:44 am
CONCLUSION
¶ 98 For the foregoing reasons, the judgment of the circuit court declaring Public
Act 98-599 to be unconstitutional and permanently enjoining its enforcement is
affirmed.
Comment by very old soil Friday, May 8, 15 @ 10:45 am
Perhaps the governor, gereral assembly, and local mayors will now start looking at revenue sources to properly fund these obligations
Comment by Anonymous Friday, May 8, 15 @ 10:45 am
Good for my parents, rough for any legislator or staffer who wanted a summer vacation, and roughest for taxpayers. And I think even tougher on Rahm, perhaps, than the Governor, who was already in the hole
Comment by vibes Friday, May 8, 15 @ 10:45 am
There goes Rauner’s budget! Shock!
Comment by East Central Illinois Friday, May 8, 15 @ 10:45 am
I’ll say first this ruling directly impacts my pension. But I’ve never understood why people were so hopeful of this outcome. I’ve always thought this was a better solution than letting Rauner have a crack at it. Surely anything he comes up with will be worse for pensioners right? what am i missing?
Comment by Johnny Pyle Driver Friday, May 8, 15 @ 10:46 am
Good. I’m glad that Bruce Rauner’s anti-union pension bill was tossed. Now, if only we could get a couple Democrats in the GA to come up with a smart, Constitutional plan…
Wait, what?
Comment by Johnny Q. Suburban Friday, May 8, 15 @ 10:46 am
This is truly a GOOD FRIDAY.
Comment by Norseman Friday, May 8, 15 @ 10:47 am
That sound you hear is the cracking of the ice …
Comment by Anyone Remember Friday, May 8, 15 @ 10:47 am
Cut to Trib Tower…
Comment by From the 'Dale to HP Friday, May 8, 15 @ 10:47 am
I know it’s not even 11:00 AM, but I feel like today is going to be an up day.
Comment by Roamin' Numeral Friday, May 8, 15 @ 10:48 am
Good Friday in Illinois government came a few weeks later.
Gov. Rauner, what say you?
Comment by Oswego Willy Friday, May 8, 15 @ 10:48 am
How long till Bruce says the Supremes are corrupt and/or files suit to take this to the next level.
Comment by Jack Stephens Friday, May 8, 15 @ 10:48 am
*opens link to read opinion*
“JUSTICE KARMEIER delivered the judgment of the court…”
*brain shuts down from too much excitement*
*regains consciousness*
*gets popcorn to watch comments*
Comment by Dirty Red Friday, May 8, 15 @ 10:49 am
I think this also shuts down Rauner’s proposed pension plan
Comment by huh Friday, May 8, 15 @ 10:50 am
Paragraph 45 in the analysis says it all:
“The pension protection clause clearly states: “[m]embership in any pension or retirement system of the State *** shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” (Emphasis added.) Ill. Const. 1970, art. XIII, § 5. This clause has been construed by our court on numerous occasions, most recently in Kanerva v. Weems, 2014 IL 115811. We held in that case that the clause means precisely what it says: “if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired.”
Hats off to RNUG for his continued analysis and guidance over the last few years.
Comment by Sangamo Sam Friday, May 8, 15 @ 10:50 am
Some people are happy today. How long before Illinois debt and city of Chicago debt are downgraded to junk bond status??? Anyone out there want to guess? Maybe , Rich can have a contest?
Comment by Steve Friday, May 8, 15 @ 10:51 am
Yes good news for retirees , bad news for taxpayers. But the taxpayers elected those officials that put us here today. My question , can the State now raise contribution rates for current state employees , and I now think we are looking at taxing retirement income in this State.
Comment by ISP Retired Friday, May 8, 15 @ 10:51 am
Johny…
This isn’t Rauners bill. He’s always said this law was unconstitutional.
Comment by Political Animal Friday, May 8, 15 @ 10:52 am
Well, as a result of that Doggone ILSC, Brucie will have to go back on his word, and own the new state income tax increase. What a DOPE.
Comment by Big Joe Friday, May 8, 15 @ 10:52 am
Keep cheering. Without a doubt in my mind there will be a constitutional amendment to change the pension clause on the ballot in 2018 along with the Rauner ticket. It has only just begun.
Comment by Almost the Weekend Friday, May 8, 15 @ 10:52 am
The Cubs win!!!! The Cubs win!!!!
Comment by howard Friday, May 8, 15 @ 10:53 am
So did Madigan call culerton and apologize?
Or is this a vast conspiracy where Madigan always knew this would fail and it went exactly as he had planned…..
Comment by Ghost Friday, May 8, 15 @ 10:53 am
So much for the Owl Sandack’s of this world and as a lawyer indicating the legislation was good, necessary and legal
Comment by Ex Suburban Mayor Friday, May 8, 15 @ 10:54 am
Duh!
Comment by Sir Reel Friday, May 8, 15 @ 10:55 am
And the Supremes took a pretty good slap at the politicos…Note the last line of the following
One alternative, identified at the hearing on Public Act
98-599, would have been to adopt a new schedule for amortizing the unfunded
liabilities. The General Assembly could also have sought additional tax revenue.
While it did pass a temporary income tax increase, it allowed the increased rate to
lapse to a lower rate even as pension funding was being debated and litigated.
¶ 68 That the State did not select the least drastic means of addressing its financial
difficulties is reinforced by the legislative history. As noted earlier in this opinion,
the chief sponsor of the legislation stated candidly that other alternatives were
available. Public Act 98-599 was in no sense a last resort. Rather, it was an
expedient to break a political stalemate.
Comment by Mister Whipple Friday, May 8, 15 @ 10:55 am
to add to my previous comment, doesn’t this just increase the likelihood of a constitutional amendment? I don’t think voters/taxpayers outside of government workforce are going to support simply forcing the legislature to fully fund these things
Comment by Johnny Pyle Driver Friday, May 8, 15 @ 10:56 am
You are cheering for this? So proud to live in a state where we uphold laws over making common sense decisions that would prevent the state from ruin. Cool.
Comment by Lt.Simms Friday, May 8, 15 @ 10:57 am
Is it too much to hope that Ty, Big Brain Bruce, Statehouse Chick and the scholars at Sidley and Austin will now pile back into the clown car and drive away?
Lot of time wasted on their ignorant and malicious nonsense.
Comment by Wordslinger Friday, May 8, 15 @ 10:57 am
Unanimous decision…That door was wasn’t just closed, it was slammed shut!
Comment by Wensicia Friday, May 8, 15 @ 10:57 am
At the risk of being flip, why is this news?
That the Supreme Court was going to overturn the law was as obvious as, well, the plain language of the constitution. If the AG had any stones, she would have refused to argue the case on the grounds that it was a complete waste of time and money.
Comment by Yawn Friday, May 8, 15 @ 10:57 am
Cullerton was right.
Comment by Roland the Headless Thompson Gunner Friday, May 8, 15 @ 10:58 am
The Owl Sandack - “Who” said it isn’t Constitutional? Oh, yeah, they may know.
Rauner - Can I just say the Supremes are corrupt and pretend this didn’t happen? No? Time for another $20 million to buy me a Constitution.
Comment by Oswego Willy Friday, May 8, 15 @ 10:58 am
And Bruce will now double down to break the unions!
Comment by Jack Stephens Friday, May 8, 15 @ 10:58 am
===You are cheering for this? So proud to live in a state where we uphold laws over making common sense decisions that would prevent the state from ruin. Cool.===
Isn’t upholding the Constitution a common sense decision?
Comment by historic66 Friday, May 8, 15 @ 10:59 am
New casinos in every town starting 2016.
Comment by Jose Abreu's next homer Friday, May 8, 15 @ 10:59 am
“Without a doubt in my mind there will be a constitutional amendment to change the pension clause on the ballot in 2018 along with the Rauner ticket.”
Let some doubts enter your mind.
Comment by Arsenal Friday, May 8, 15 @ 11:00 am
Everyone kind of knew where this was going, but it was worth the shot. Sort of like asking the girl who you knew would never go to the dance with you.
So how much extra does this add to the hole?
Comment by OneMan Friday, May 8, 15 @ 11:00 am
Not unexpected but a great day nonetheless. I would expect another try at a constitutional amendment in time.
Comment by Stones Friday, May 8, 15 @ 11:01 am
Jack Stephens - Friday, May 8, 15 @ 10:48 am:
How long till Bruce says the Supremes are corrupt and/or files suit to take this to the next level.
Uh, there is no next level. The Illinois Supreme Court is as high as these things may go.
Comment by Walter Reuther's Son Friday, May 8, 15 @ 11:01 am
BOOM goes the dynamite !
Our constitution was written to protect the state’s citizens from overreaching , and just because one branch (actual two, when you remember governor “I was out on this earth to solve this pension mess”) want to demonize one group of citizens doesn’t mean the other branch has to play along with them.
A good day for ALL citizens of this state. Well, maybe not GA members who ignored their oath if office, but I don’t feel the least bit sorry for them;-)
Comment by Roadiepig Friday, May 8, 15 @ 11:02 am
“You are cheering for this? So proud to live in a state where we uphold laws over making common sense decisions that would prevent the state from ruin.”
If you want to live somewhere where the state can ignore the law, i’m sure you can find one.
I mean, geez, I’m a liberal, but I don’t want the government to be THAT powerful.
Comment by Arsenal Friday, May 8, 15 @ 11:02 am
Constitutional Rights: Americans have died for
them.
Our Supreme Court has done their sworn duty.
Comment by x ace Friday, May 8, 15 @ 11:03 am
expected, but momentous nonetheless.
tax retirement income. i am willing to pay my share.
Comment by Langhorne Friday, May 8, 15 @ 11:03 am
” . . . Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. . . . ”
Excellent!!!!
Comment by East Central Illinois Friday, May 8, 15 @ 11:03 am
The loser of the day is PQ if you ask me. He lost an election for signing a bill that was ultimately struck down as unconstitutional. Good work fellas.
Comment by Apple Friday, May 8, 15 @ 11:04 am
Interesting sidelight - normally the ISC issues advance notice of the cases in which they will be issuing decisions in that week. A Court watcher tells me this is the first time in at least five years that a decision has been issued without notice. Huh.
Comment by Archiesmom Friday, May 8, 15 @ 11:04 am
==No dissent was filed==
We haven’t heard from the Tribune editorial board yet.
Comment by Wensicia Friday, May 8, 15 @ 11:04 am
“The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible.”
Comment by Name Withheld Friday, May 8, 15 @ 11:04 am
Well, alrighty then . . .
Comment by Ray del Camino Friday, May 8, 15 @ 11:05 am
Ulp. Won’t be long now before the State passes the much-feared “orifice tax.”
Comment by Streator Curmudgeon Friday, May 8, 15 @ 11:06 am
Got to read the Trib’s editorial this weekend. I mean how dare the ILSC defend public sector employees. Bruce Dold is crafting his snarky prose right now, I bet.
Comment by Bogey Golfer Friday, May 8, 15 @ 11:06 am
Please, enough about the “bad day for taxpayers” thing.
Everybody broke these dishes. The voters who wanted lower taxes and more services. The governors who used pension funding as a chip in collective bargaining agreements. The unions who went along with that because it made their members happy. (see voters above.) The General Assembly members who signed off on it. The reporters who thought that fiscal policy was boring as compared with the political horse races. The civic groups who decided to focus on their own political hobbyhorses rather than the fiscal future of this state.
We all did it. I mean, I’ve known for ten years that the pension day of reckoning was coming, and I didn’t crab when the income tax rate went up. But neither did I send thousands of extra dollars to the State to help offset my mom’s pension.
Now that the Court has spoken, could we please, please, please stop talking about whose fault it is and start coming up with a solution that will not devastate the people whose lives and futures depend on our state government.
Come on. Come on. Everybody grow up. “He started it” is not a solution - it’s the cry of the playground.
Comment by Soccermom Friday, May 8, 15 @ 11:07 am
@FakeStatehouseChick - I know who I blame, Madigan #SimpleMindedDopiness
@FakeStatehouseChick - Now the IL Supreme Court is against Rauner, and using the Constitution to do it. Rauner is being stopped #YepLegallyAndConstitutionally
Comment by Oswego Willy Friday, May 8, 15 @ 11:07 am
Get ready for pain people. Its no surprise the SC overturned this dumb idea, but it means that austerity is coming to town. Anyone with a brain know that we need lots of cuts and lots of revenue, so we need a bifurcated approach.
Comment by BlameBruceRauner Friday, May 8, 15 @ 11:08 am
Tribune note - presently their commenting function isn’t working on this story. Their computer is having a nervous breakdown?
Comment by Anyone Remember Friday, May 8, 15 @ 11:09 am
There is a bright side to this for people not in one if the impacted pension systems. It means we can finally work toward making tough financial choices that dig the state out of the financial hole it choose to create for itself. No “magic beans” budgets, and no hope in any legislators mind that there’s an easy solution. Hopefully, combined with efforts to remove non starter issues like right to work from the discussion, we can move toward fixing the states fiscal problems through cuts and revenue increases. It will be difficult, but a decade of fiscal discipline will help teach all of us the importance of fiscal discipline and responsibility.
Comment by AC Friday, May 8, 15 @ 11:10 am
How long before Bruce Rauner calls for privatizing some of the state universities? Just a reminder, everyday a government worker isn’t on the payroll is one day they aren’t accruing pension benefits. The Illinois Supreme Court can’t prevent public university closures.
Comment by Steve Friday, May 8, 15 @ 11:10 am
=== Down. Toast. Over. ===.
That can apply to this state. It soon will apply to the taxpayers, particularly those in Chicago.
Comment by Percival Friday, May 8, 15 @ 11:10 am
Sure wish the politicians who voted for this could be held accountable but that would be too much to ask.
Bye, bye IPI, and the Civic Committee. You knew better but you have no values and are exposed for what you really are.
Comment by Federalist Friday, May 8, 15 @ 11:10 am
Well said Soccermom
Comment by Peoria Guy Friday, May 8, 15 @ 11:10 am
“we uphold laws over making common sense decisions that would prevent the state from ruin.” Ok then, by your logic, they can pass a law for a graduated income tax tomorrow and everyone should be happy about that. Oh, and the highest rate…reserved specifically for you. But be happy, it was a common-sense solution.
/snark
Comment by Skeptic Friday, May 8, 15 @ 11:10 am
While it was the correct ruling, question is, does it strengthen Rauner’s hand for a 401K teir 3 type system?
COLAs ar off the table. alternative offers are off thetable. Retiree medical is off the table. and diminishment from the time you enter the system appears to be done. Still reading, but it doesn;t look like it impacts just retirees, but all pariticipants even those who have not retired.
What’s plan B?
Comment by Todd Friday, May 8, 15 @ 11:11 am
This is not an “I told you so.”
But I did warn that I found it highly improbably that Justices Thomas, Garman and Karmeier would vote to effectively abolish the pension clause.
Governor Rauner calling the state’s high court corrupt undoubtedly did not help his case, but I think the vote would be the same regardless.
Yawn: It is news because the ruling was unanimous and absolute.
Comment by Yellow Dog Democrat Friday, May 8, 15 @ 11:11 am
Great News!!!!!!
Comment by JerryG Friday, May 8, 15 @ 11:11 am
OK, glad this is finally over. Now, let’s solve the pension problem legally. The state and other public agencies have to pay what they owe to these plans and that isn’t going to be fun for anyone.
Also, it is probably time to eliminate the practice of offering public pensions in the first place. The state has Tier 2, etc., but now teachers, police, fire and other newly hired public employees should be offered a defined contribution plan and enrolled in social security. Let’s not let ourselves fall back into this mess again.
It will make public service a less attractive career choice, but it might add some much-needed stability and predictability in addition to being sustainable.
Comment by 47th Ward Friday, May 8, 15 @ 11:12 am
That upcoming tax on retirement income will come in real handy now.
Comment by nixit71 Friday, May 8, 15 @ 11:12 am
People shouldn’t forget that state retirees are taxpayers too. When the income taxes get bumped up, retirees will pay more, just like everyone else.
Comment by Big Joe Friday, May 8, 15 @ 11:12 am
Why does everyone think this is so tragic for the Tribune? Yes, they supported the bogus constitutionality of the bill, but now they get to have their “Come to Jesus moment” theme. Sure, everyone contributed to this mess, but one party is associated with runaway government spending a lot more than the other and Rauner belongs to the latter. Does anyone remember Proposition 13 in California?
Comment by lake county democrat Friday, May 8, 15 @ 11:13 am
(Tips cap to - Soccermom - in deference to her comment)
Well said, - Soccermom -.
“That pesky constitution wins again?”
Yep. As it should.
Comment by Oswego Willy Friday, May 8, 15 @ 11:13 am
How long till Bruce says the Supremes are corrupt and##He already said that. He might have surmised what the ruling would be. Just wanted to say how corrupt they are to explain why they ruled as they did.
Comment by Minnow Friday, May 8, 15 @ 11:14 am
Wonder how Paul Lisek & the Illinois Policy Institute will spin this.
Comment by Hedley Lamarr Friday, May 8, 15 @ 11:14 am
“tax retirement income. i am willing to pay my share.”
Why just choose that exemption? There are over $8 billion in other exemptions.
Why is it so popular to attack just retirement income?
Anyone want to comment?
Comment by Federalist Friday, May 8, 15 @ 11:15 am
“The president is required to carry out the laws of the land, the laws of the land come from the legislative branch,” said GOP Presidential Candidate Ben Carson this week. “So if the legislative branch creates a law or changes a law, the executive branch has a responsibly to carry it out. It doesn’t say they have the responsibility to carry out a judicial law.” The IL GA passed the Pension Reform Act. The ILSC rejected the Pension Reform Act. Will Governor Rauner echo Dr. Carson?
Comment by SilverStreak Friday, May 8, 15 @ 11:15 am
==The loser of the day is PQ if you ask me. He lost an election for signing a bill that was ultimately struck down as unconstitutional. Good work fellas. ==
Quinn said he was put on earth to accomplish this and he also said something to the effect that his most proud moment was suspending the legislators’ salary. Great record.
Comment by Irving Park Phil Friday, May 8, 15 @ 11:15 am
Game. Set. Match. Thank you ISC for upholding the Illinois Constitution. I’ve depended on that for the 35 years I’ve worked for the state, and I’m happy to see that this onerous attempt at unilaterally breaking a contract has been overturned. That the Justices upheld the plan language of the Constitution is gratifying, but the most gratifying thing about the decision is that it was the just thing to do. The pensions’ funding has been reduced or entirely stripped for many years to pay for state programs that tax revenue was clearly insufficient to support. That was obvious for decades, and is even more obvious now that Rauner has demanded that the income tax increase be allowed to sunset.
Thank you to those who have supported the pension clause. To those who didn’t, I hope that one day you get to experience what its like to become “one of them”. To those legislators who voted for this monstrosity I’ll actively work against your continued representation. To those others who have supported the legislation, we’ll continue to disagree, but there’s one thing for certain. You have a choice: A) Remain a citizen of Illinois, and pay back what was taken from the pensions, or B) Leave the state. Either way, I’ll be satisfied.
Comment by PublicServant Friday, May 8, 15 @ 11:16 am
I’d like to give a shout out to Sen. Toi Hutchinson, whose questioning of Sen. Raoul is quoted in the opinion, and who had the conviction, very publicly stated, to vote against a bill she knew was unconstitutional.
Comment by Archiesmom Friday, May 8, 15 @ 11:18 am
“When the income taxes get bumped up, retirees will pay more, just like everyone else.”
Retirement income is not taxed in Illinois.
Comment by Huh? Friday, May 8, 15 @ 11:20 am
=== So how much extra does this add to the hole? ===
Oneman, it doesn’t add anything to the hole. It just doesn’t allow the General Assembly to illegally cut benefits to fill in the hole.
Comment by Norseman Friday, May 8, 15 @ 11:20 am
Big pension obligation =’s BIG gaming bill…
Comment by Not Rich Friday, May 8, 15 @ 11:21 am
At Todd - Tier 3 system…sure, tier 3, 4, 5, 6, etc., it doesn’t matter, as long as those already working or retired in Tier 1 or 2 aren’t included. You work under the rules that were in effect when you were hired…contracts. Change the contract, and we BOTH have to agree…if not, the contract change is invalid. As to a constitutional amendment to change the pension clause…I’m not sure that’s a box anyone is going to vote to open, since the rest of the box might have a chance to be examined as well.
Lastly, to the skeptics decrying what may happen next…sanity is my hope, as well as reality and allow for time and increments to get us where we need to be. (full disclosure: I’m as conservative as they get, but this issue has burned me to no end…I grew up in private business where a handshake and your word meant something special, and contracts were contracts.)
Comment by Captain Illini Friday, May 8, 15 @ 11:22 am
So if there is a ballot referendum in 2016 to remove the pension clause of the constitution how much will that help with the states debt obligations? I don’t think that would let the state off the hook for what they owe retirees. It would seem to run afoul of the Constitution in that no state may pass any law impairing the obligation of contracts.
Comment by The Dude Abides Friday, May 8, 15 @ 11:22 am
Like I told someone in Wisconsin this morning, at least we don’t have to deal with the pension issues that Illinois has.
Comment by CLJ Friday, May 8, 15 @ 11:22 am
Soccermom -
The AFSCME people I know have been talking about this for decades. Maybe not effectively, maybe not constructively, but for at least 20 years now have heard AFSCME people complain about Walker, Thompson, Edgar …
Comment by Anyone Remember Friday, May 8, 15 @ 11:22 am
47, going to a DC plan will increase the cost to address the unfunded liability. You’re eliminating new employee contributions from the mix.
Comment by Norseman Friday, May 8, 15 @ 11:22 am
RNUG and others……..is this a shot across the bow at Rauner way of looking at changing pensions? This looks like they are saying all those vested cannot be changed, even from here on out
If allowed to take effect, Public Act 98-599, would clearly result in a diminishment of the retirement annuities to which Tier 1 members of GRS, SRS, SURS and TRS became entitled when they joined those systems.
Comment by Interesting Friday, May 8, 15 @ 11:23 am
I retired last year. Thank you Supreme Court. But also, thank you to the UNION and its attorneys. Great job defending us State workers. Everyone, please don’t forget that what the Union has done for us!
Comment by No Raise Friday, May 8, 15 @ 11:23 am
..and now ladies and gentlemen “death by a thousand cuts”.
Comment by Empty Suit Friday, May 8, 15 @ 11:23 am
SS, by all accounts, Carson is a whale of a surgeon, but his quote, like your post, makes absolutely no sense.
For those predicting a constitutional amendment now.,,, for what? To steal?
You pay what you owe. Make regular payments and the juice wont kill you.
Comment by Wordslinger Friday, May 8, 15 @ 11:23 am
Soccermom. Yes
Comment by walker Friday, May 8, 15 @ 11:23 am
Just a reminder, if retirement income becomes taxable many seniors will declare residency in places like Florida to avoid the tax.
Comment by Steve Friday, May 8, 15 @ 11:24 am
While some of the comments go a bit too far, I think I’m reading mostly a sense of relief from many of you. And for that, I’m truly happy that this has brought you that feeling. We’ve still got a very big problem and this solution just got more difficult to come up with.
Soccermom, as she often does, promoted a measured response. This onion still needs to be peeled carefully. Today’s news was inevitable. It’s news because it’s real now. The solutions forthcoming will be just as real. I don’t see anyone trying to tinker around the edges of this anymore.
The public will have a lot to say about this. My advice would be to endear yourselves to them as much as possible. The real solution is in their hands now.
Comment by A guy Friday, May 8, 15 @ 11:25 am
Ditto Peoria Guy and Oswego Willy, great summation, Soccermom! Too bad most of our journos can’t add that level of insight and history to the discussion so the public can actually understand why this happened.
Journalists: you are getting whomped by blog commenters. What is your value added and why should people pay for your product?
Comment by Willie Stark Friday, May 8, 15 @ 11:26 am
Would this be an appropriate time to get the AAI raised?
Comment by Willy Lump Lump Friday, May 8, 15 @ 11:27 am
===47, going to a DC plan will increase the cost to address the unfunded liability. You’re eliminating new employee contributions from the mix.===
I know. But aren’t we already doing that with Tier 2?
I just believe, with people living longer in retirement than ever before, defined benefit plans are a risky bet. It’s going to cost taxpayer an enormous sum to catch up with unfunded liability, but at a minimum we should stop digging deeper. In 50 or 60 years, when my kids are ready to retire, we really should be able to finally pay this debt off.
My point is, let’s stop the delay and get on with it.
Comment by 47th Ward Friday, May 8, 15 @ 11:27 am
===The public will have a lot to say about this. My advice would be to endear yourselves to them as much as possible. The real solution is in their hands now.===
What does that mean?
Comment by Oswego Willy Friday, May 8, 15 @ 11:27 am
You mean we’ve been eating all this cake and we can’t keep it, too???? How rude!
Great ruling, and coming in at a good time.
Comment by Not quite a majority Friday, May 8, 15 @ 11:29 am
==What does that mean?===
It means that there will be a great expectation to shift this burden to the taxpayers of Illinois. I’d be making a case to them full of logic and free of vitriol. I wouldn’t be waving a court decision in their face. We’re still deep in the woods.
Comment by A guy Friday, May 8, 15 @ 11:30 am
==Why is it so popular to attack just retirement income?==
Because when 72,000 state retirees receive pensions ($60K and up) that are higher than the median household income in the state ($57K), yet pay zero state income tax, folks wonder what makes retirees so different than the rest of us?
Comment by nixit71 Friday, May 8, 15 @ 11:30 am
A Guy gets it right. Those draconian cuts to social programs Rauner supports just got a huge boost - even if you are happy about the decision and think the pols are to blame, that fact alone should sober you. Teachers and other current workers should be very worried what’s going to happen to them in the name of “shared sacrifice.” The state can’t go bankrupt but it can let every local government and authority go bankrupt and newsflash: people don’t like skyrocketing taxes. Yes, there will be higher taxes, but if you think that’s unlimited, you’re kidding yourselves.
Comment by lake county democrat Friday, May 8, 15 @ 11:31 am
- Enough -
Please keep your drive-bys at lest pertinent to the topic at hand.
Comment by Oswego Willy Friday, May 8, 15 @ 11:31 am
- A Guy -,
And when the public asked “why”, dontcha think the city ruling would come in handy?
You sure you’re in PR?
Comment by Oswego Willy Friday, May 8, 15 @ 11:33 am
-You are cheering for this? So proud to live in a state where we uphold laws over making common sense decisions that would prevent the state from ruin. Cool.-
Yes, this country was founded upon, and has always operated on, the principle of the rule of law, not the rule of man. What is a “common sense decision” other than the opinions of one or a small group of men? And who gets to decide what is “common sense?”
Comment by Anonymous Friday, May 8, 15 @ 11:33 am
Agree with Soccermon (11:07). This is a good day for taxpayers because the judicial branch got it right. If police powers were granted, more reckless spending and irresponsible management decisions would have been encouraged.
Comment by Soccertease Friday, May 8, 15 @ 11:33 am
“court ruling”
Comment by Oswego Willy Friday, May 8, 15 @ 11:35 am
“At least four members of the Supreme Court will uphold it”.
So lets remember this the next time we launch into a “Madigan controls all” conspiracy theory.
Comment by Anonymous Friday, May 8, 15 @ 11:36 am
“Without a doubt in my mind there will bw a constitutional amendment to change the pension clause on the ballot in 2018 along with the Rauner ticket.”
Please read Pages 19 and 20 of the decision. “The protections afforded to such bebefits by article XIII, section 5 attach once an individual first embarks upon employment in a position covered by a public retirement system, not when the employee ultimately retires. Accordingly, once an individual begins work and becomes a member of a public retirement system, any subsequent changes to the pension code that would diminish the benefits conferred by membership in the retirement system cannot be applied to the individual.” Membership begins when hired. Go ahead and pass a constitutional amendment, much easier said than done. It will not pay down the debt and the pension protection clause will be in effect for those currently employed to ensure benefits earned and will be earned. Maybe someone should share that with our current governor.
Comment by Anonymous Friday, May 8, 15 @ 11:37 am
===It means that there will be a great expectation to shift this burden to the taxpayers of Illinois===
Um, that’s where it has been all along genius. Up until now, we’ve been arguing over who had what for dinner, but now it’s time to pay the check.
The only “shift” is which sets of taxpayers end up paying which parts of the bill.
Comment by 47th Ward Friday, May 8, 15 @ 11:37 am
OK - the parameters have been set for what can be done about pensions. Pay ‘em.
There are many options. One that is brought up all the time is taxing retirement income. Many political problems with this, etc.
However, there is some symmetry to this. The cost reduction from SB1 for FY2016 was $1.163 billion (COGFA). If we were to tax retirement income at 3.75% (excluding social security and income under $50,000) we would get an additional $1.6 billion on a $31 billion income (2012 income figure per Civic Federation). So - it would be a wash.
And - the projected increase in income from this source would more than match the cost reduction from SB1 going forward.
There is a certain financial symmetry and logic to this.
Seniors tend to vote - so maybe this would be a non-starter….
Comment by archimedes Friday, May 8, 15 @ 11:37 am
==You sure you’re in PR?==
I am sure. As such, I offered some advice. This will play out differently elsewhere.
Comment by A guy Friday, May 8, 15 @ 11:38 am
Oops - no edit key. that’s 1.16 billion income for taxing retirement income…
Comment by archimedes Friday, May 8, 15 @ 11:39 am
What does that mean?
Well, let me offer my take on it…
I am gonna go out on a limb and suggest that there is a higher number of state pension system participants among the commentors here than within the general state population. Just an observation…
The state is going to be able to do less ‘other stuff’ because more and more of state revenues are going to have to go into the pension systems.
That hole (not just the pension hole) cannot be filled alone by taxing other people and things you don’t use and by cutting programs that you don’t like and don’t care about.
It seems that political viewpoint is driven by a perception that some other entity is out to get/cheat you or getting a better deal than you.
Be it a rich guy who trying to get you (look at the comments about Rauner’s wife’s group or those folks who think public employee unions exist to screw Joe taxpayer…
One of the very real options to fix the budget hole is a government that is more and more outsourced and/or just does less.
It is going to be easier to sell that idea if the unions and public employees do a victory lap. That may not be fair, but I think that is the reality IMHO.
That is what I think that means.
Comment by OneMan Friday, May 8, 15 @ 11:41 am
Sorry, no idea why it double spaced…
Comment by OneMan Friday, May 8, 15 @ 11:41 am
Soccermom @ 11:07 has it right! Maybe now we can get on with solving the “debt problem” in some reasonable way rather than just trying to renege on the debt. There never was a “pension problem”, only a “debt problem”.
I am a State retiree and have long thought there was no justification why I should not pay my “fair share” of Illinois income tax — just like my kids, grand kids and the Wal-Mart Greeter.
Comment by Anonymous Friday, May 8, 15 @ 11:42 am
===This will play out differently elsewhere.===
What are you talking about? The ruling is as plain as day.
It’s played out. The question is “now what?”
Comment by Oswego Willy Friday, May 8, 15 @ 11:42 am
We all benefited from the low 3% state income tax rate that Illinois had for 20 years. However, Illinois was able to keep that low rate by skipping and modifying pension payments. Now we are all going to have to chip in to make up for the mistake of the State’s skipped and missed pension payments. The Governor will probably come up with some more magic beans. But after today’s decision, its hard to imagine that the Gov’s magic beans will spout, yet alone grow.
Comment by Joe M Friday, May 8, 15 @ 11:43 am
If you think moving to Florida with no income tax is the way to go, you better think again. Florida and its cities get their “pound of flesh” from retirees living there.
Comment by SaxMan Friday, May 8, 15 @ 11:45 am
What Joe M said.
Comment by 47th Ward Friday, May 8, 15 @ 11:47 am
Captain — as for a new system, aka tier 3 maybe It might not have to be agreed to.
last and final offer by Rauner. Union says no, either lock out or strike commences. replacement workers hired under at will 401k type program. No agreement necessary.
I would also wonder when things get so dire that a constitutional amendment to change the pension clause gets filed. If it were to even pass and go tot the voters, they would pass it in a minute.
Comment by Todd Friday, May 8, 15 @ 11:49 am
The standards by which we gauge “underfunded” are exaggerated. They have assumed a compounded inflation rate of 3% forever, and it’s only been there once in the last 20 years!
Comment by Nona Friday, May 8, 15 @ 11:49 am
A guy:
And I say this with all due respect, it is time for the PR folks to not be in charge.
There is no spinning this.
The ruling was bipartisan, unanimous, and absolute.
Blaming the judiciary plays to the smallest quarter of the electorate at the expense of the other three-quarters.
And, as Soccermom points out, does not get you any closer to a solution.
Comment by Juvenal Friday, May 8, 15 @ 11:52 am
Glad the Court ruled as they did. Maybe the GA should give more serious consideration to Martire’s plan. See this article for details: http://www.news-gazette.com/news/local/2015-04-28/want-fix-state-budget-heres-how-says-one-expert.html
Comment by NotYetRetired Friday, May 8, 15 @ 11:52 am
“strike commences. replacement workers hired” Um, I’m not labor law expert, but I really don’t think it’s that easy.
Comment by Skeptic Friday, May 8, 15 @ 11:52 am
The court’s discussion of the contracts clause provision strongly suggests this case would have come out same way without the pension clause - so an amendment to the constitution likely won’t change anything
Comment by Anonlaw Friday, May 8, 15 @ 11:52 am
===The public will have a lot to say about this. My advice would be to endear yourselves to them as much as possible. The real solution is in their hands now.===
@A Guy, the last I looked, I’m a member of the public too. One, whose position was supported by many other of my fellow taxpayers. To the supposed masses of the public who were looking to violate the state constitution and decimate my planned for retirement, not only is endearing myself to them not high on my list of priorities, I think they ought to be lining up and thanking me for keeping there taxes lower than they should have been for as long as I have.
Comment by PublicServant Friday, May 8, 15 @ 11:54 am
Enough with the jubilation.
Enough with the handwringing.
Time to fix it on a bipartisan, constitutional basis.
Yeah right.
Comment by Jake From Elwood Friday, May 8, 15 @ 11:54 am
Guy, you’ve never understood the issue and you don’t understand the ruling, which you obviously havent read.
But, by all means, feel free to embarrass yourself with all sorts of ” advice.” You’re the champ at that.
Comment by Wordslinger Friday, May 8, 15 @ 11:59 am
Tax retirement income? That is not just SERS, SURS TRS, etc. It is also Social Security, private pensions, IRA and 401k withdrawals. A very broad brush effecting many voters.
Comment by anon. Friday, May 8, 15 @ 12:01 pm
When it came down to it, there were no real negative implications with either Rod’s nor Pat’s magic beans failed to grow.
Comment by OneMan Friday, May 8, 15 @ 12:02 pm
Tax the weed not seniors on fixed income
Comment by Anonymous Friday, May 8, 15 @ 12:06 pm
Tax retirement income (this is a very Illinois-type move: I have to give you the money? Fine, but you’re going to pay me on the back end), lengthen the amortization, restore the income tax increase and we’re OK. Someone get Martire on the phone…
Comment by chi Friday, May 8, 15 @ 12:08 pm
Soccermom’s earlier post is well worth posting again.
“Please, enough about the “bad day for taxpayers” thing.
Everybody broke these dishes. The voters who wanted lower taxes and more services. The governors who used pension funding as a chip in collective bargaining agreements. The unions who went along with that because it made their members happy. (see voters above.) The General Assembly members who signed off on it. The reporters who thought that fiscal policy was boring as compared with the political horse races. The civic groups who decided to focus on their own political hobbyhorses rather than the fiscal future of this state.
We all did it. I mean, I’ve known for ten years that the pension day of reckoning was coming, and I didn’t crab when the income tax rate went up. But neither did I send thousands of extra dollars to the State to help offset my mom’s pension.
Now that the Court has spoken, could we please, please, please stop talking about whose fault it is and start coming up with a solution that will not devastate the people whose lives and futures depend on our state government.
Come on. Come on. Everybody grow up. “He started it” is not a solution - it’s the cry of the playground.”
Read, think and please “Everybody grow up.” Start the serious work of addressing the problem with a real and constitutional solution.
Comment by Buster Friday, May 8, 15 @ 12:09 pm
I’m not really sure why there are so many here saying that this means the doomsday has arrived and that we now have a huge debt that will have to be repaid with devastating cuts and intolerable tax increases. The fact is, we’ve been making the full pension payments for several years now. The ramp is in the rear view mirror, and now there are only relatively minor fluctuations in the annual required contribution to the pensions. The state has been rather strapped financially the past few years, but it’s been able to muddle through and provide some decent approximation of the services expected by the populace. The one and only factor that’s changed since then is that the income tax rate has decreased. No one likes to pay more taxes, and everyone would love to get a government for free, but we survived a 5% personal income tax rate, and the fact that we were paying the bills when we had it indicates that the solutions to our problems aren’t nearly as dire as some would like us to believe.
Comment by drew Friday, May 8, 15 @ 12:11 pm
==Tax the weed not seniors on fixed income==
I wouldn’t call a 3% compounded COLA “fixed” income. And 72,000 state pensioners pulling in more than the median family in IL have the means to pay state income tax. And that’s not including private sector retirees of similar wealth.
Comment by nixit71 Friday, May 8, 15 @ 12:12 pm
==Someone get Martire on the phone…==
I think he’s busy drumming up contributions from the NEA, IEA, IPACE, AFT, IFT, IFT COPE, SEIU LOCAL UNION 1, SEIU ILLINOIS COUNCIL, SEIU HEALTHCARE ILLINOIS & INDIANA, AFSCME, AFSCME HQ…
…you know…bi-partisan sources.
Comment by nixit71 Friday, May 8, 15 @ 12:18 pm
The rule of law has been upheld, and now perhaps the political road to a pension solution can continue. This has always been about a legal and moral issue having to play out in a political system. The GA and Rauner now have the cover they need to truly solve the pension debt issue. The pension system itself is fine if you fund it.
Comment by facts are stubborn things Friday, May 8, 15 @ 12:20 pm
Juvenal — I appreciate the kind words. But you will never get Soccermom to agree that PR folks should not be in charge….
Comment by Soccermom Friday, May 8, 15 @ 12:23 pm
Here comes rauner with a constitutional ammendment to correct this
Comment by foster brooks Friday, May 8, 15 @ 12:24 pm
Tax the weed
That would take a lot of weed
Comment by OneMan Friday, May 8, 15 @ 12:24 pm
What are the odds that all Tier 1 employees are fired and rehired under a “take Tier 2″ or you don’t get rehired plan?
Comment by CharlieKratos Friday, May 8, 15 @ 12:25 pm
@nixit71 - Friday, May 8, 15 @ 11:30 am:
==Why is it so popular to attack just retirement income?==
Because when 72,000 state retirees receive pensions ($60K and up) that are higher than the median household income in the state ($57K), yet pay zero state income tax, folks wonder what makes retirees so different than the rest of us?
YES the olde resentment factor! Nevermid that when I started in 1971 8% of my income was taken vs 4.2% for SS and that my money was invested at a rate that avgd over 8% while SS earned little. (People on SS ought to complain but some, like you, would rather attack the rest of us.)
Comment by Federalist Friday, May 8, 15 @ 12:25 pm
The problem still exists, and there is no easy answer. This decision is correct, but unlike the federal government, Illinois can’t print a big pile of cash to pretend the debt does not exist, and continues to grow. So what will Rauner do? Pilfer the construction budget, and wait for the bridges to come down.
Comment by cdog Friday, May 8, 15 @ 12:29 pm
==Why is it so popular to attack just retirement income?==
Because the best tax is always the tax that doesn’t apply to me.
Comment by OneMan Friday, May 8, 15 @ 12:30 pm
- CharlieKratos - Friday, May 8, 15 @ 12:25 pm:
==What are the odds that all Tier 1 employees are fired and rehired under a “take Tier 2″ or you don’t get rehired plan?==
It does not work like that. If you are tier 1 and get fired and rehired, you are still tier 1.
Comment by NotYetRetired Friday, May 8, 15 @ 12:32 pm
Shame on Lisa Madigan for taking this to the next level instead of standing up for what was right and obvious.
Comment by Blago's Luxurious Grey Mane Friday, May 8, 15 @ 12:36 pm
Federalist - Why is taxing retirement income considered an attack? If it is, than almost every state is attacking seniors at an alarming rate.
Why is asking a subset of the population, some of whom make as much in retirement as I do working, to pay their fair share? After all, these are the folks that went under-taxed their entire careers. So the working class are the only ones paying off the previous generations’ debts?
Comment by nixit71 Friday, May 8, 15 @ 12:38 pm
They won’t, but the GA and Rauner should ask Ralph Martire and Eric Madiar to guide them.
Comment by facts are stubborn things Friday, May 8, 15 @ 12:41 pm
“these are the folks that went under-taxed their entire careers”
If you are referring to the fact that they did not pay into SS, well, they aren’t getting those benefits. No need to attack anyone here. The same reasoning would say that they were taxed 8% (or whatever the employee contribution to their pension was) and so they were overtaxed because SS is only 6%.
Comment by chi Friday, May 8, 15 @ 12:44 pm
Four comments:
1. advocates of “conversion to 401k” should learn from this decision >>> immediately cease smoking/ingesting hallucinogens
2. a constitutional amendment that undermines the pension protection clause is far too risky given this precedent, as well as fundamentally unfair and politically unlikely; once given, rights/protections under our constitution cannot just be taken away by a constitutional amendment
3. A revamped revenue structure is our only viable solution, whether by statute or constitutional amendment, or a combination
4. three cheers for the wise one:
- Soccermom - Friday, May 8, 15 @ 11:07 am:
Please, enough about the “bad day for taxpayers” thing.
Everybody broke these dishes. The voters who wanted lower taxes and more services. The governors who used pension funding as a chip in collective bargaining agreements. The unions who went along with that because it made their members happy. (see voters above.) The General Assembly members who signed off on it. The reporters who thought that fiscal policy was boring as compared with the political horse races. The civic groups who decided to focus on their own political hobbyhorses rather than the fiscal future of this state.
We all did it. I mean, I’ve known for ten years that the pension day of reckoning was coming, and I didn’t crab when the income tax rate went up. But neither did I send thousands of extra dollars to the State to help offset my mom’s pension.
Now that the Court has spoken, could we please, please, please stop talking about whose fault it is and start coming up with a solution that will not devastate the people whose lives and futures depend on our state government.
Come on. Come on. Everybody grow up. “He started it” is not a solution - it’s the cry of the playground.
Comment by zonz Friday, May 8, 15 @ 12:46 pm
From the decision:And more than that, through its funding decisions, it could create the very emergency conditions used to justify its suspension of the rights conferred and protected by the constitution. If financial markets were rational, this prospect would not buoy our economy, it would ruin it.=
Wow I think that answers the Illinois Policy Institute, Ty Fahner, State Rep. Elaine Nekritz, and the rest of the gang of pension haters fairly well.
Comment by facts are stubborn things Friday, May 8, 15 @ 12:47 pm
@nixit71
==Why is asking a subset of the population, some of whom make as much in retirement as I do working, to pay their fair share?==
Considering this argument, I’m assuming that you also support a millionaire tax?
Comment by anonlurker Friday, May 8, 15 @ 12:48 pm
chi - Sorry, some clarification…I was talking about the state income tax.
My point was, to properly fund pensions all these years AND pay for all the services we consumed throughout those years, shouldn’t the state income tax rate have been higher? Perhaps 3.5% in 1985, not 2.5%? Or 3.75% in 1992, not 3%? Or 4% in 2000? Etc.
All rates that, if retirees paid while working and taxed, would have (probably) have us in a better financial position today?
Comment by nixit71 Friday, May 8, 15 @ 12:54 pm
==Considering this argument, I’m assuming that you also support a millionaire tax?==
If it’s written in such a way to tax only millionaires and not some backdoor attempt to bypass the constitution and implement a progressive tax on everyone at all income levels? Sure, tax ‘em.
Comment by nixit71 Friday, May 8, 15 @ 12:57 pm
Yes this is great news. Now it’s time to seek a legal solution to the problem, and that includes more revenue.
Comment by Grandson of Man Friday, May 8, 15 @ 12:58 pm
===Tax the weed
That would take a lot of weed===
I’m willing to do my part. lol.
Comment by 47th Ward Friday, May 8, 15 @ 1:00 pm
I look forward to paying more taxes so others can have higher retirement than me.
Comment by ml7636 Friday, May 8, 15 @ 1:01 pm
47th Ward:
Pensions and annuities like this are not like paying off a car or a house. They are intended to be perpetual. You will never pay off the last pensioner or the last social security recipient. The point is to create a system that is more or less stable through economic cycles and meets the demands made upon it. Obviously, this is contingent upon prudent management and upon all parties honoring the bargain, which the state, by skipping payments, failed to do. Because of actuarial considerations, it may be necessary for active employees and the state to increase contributions. Tier 2 and other schemes have the opposite effect.
Because of the failure of the state to make several payments, it is probably necessary to restructure the pension ramp arrangement to support a more gradual makeup process. All these systems are in some sense financed by current contributors subsidizing current retirees. That’s how they work. Moving to other systems, like Tier 2 and the various defined contribution and 401-K type solutions, hurts the system, though, mainly by reducing the amount of money going into the pool. In the long run, they promote instability, which is probably why they are so popular with people who oppose the concept of providing stable income for retirees.
Comment by Fr. Murphy Friday, May 8, 15 @ 1:02 pm
For the person who thinks that all retirees are getting $72,000 per year, tell that to my $28,000 per year pension.And I’m definitely at the higher end. I would never have stayed at that demanding/dangerous job as a child abuse investigator if it weren’t for the promise of a pension.
Comment by Anon Friday, May 8, 15 @ 1:02 pm
Thank you for making this point Norseman:
- Norseman - Friday, May 8, 15 @ 11:22 am:
47, going to a DC plan will increase the cost to address the unfunded liability. You’re eliminating new employee contributions from the mix.
Comment by zonz Friday, May 8, 15 @ 1:02 pm
I hear the Governor is going to start a new campaign with a motorcycle riding mascot called “Easy Spider the pension rider” that has it’s hands in everything….
Comment by Mouthy Friday, May 8, 15 @ 1:03 pm
Tell me again about how State Senator Biss is a genius.
Comment by Under Further Review Friday, May 8, 15 @ 1:06 pm
“I think they ought to be lining up and thanking me for keeping there taxes lower than they should have been for as long as I have.” LOL, PublicServant, the irony of your handle gets me every time.
Comment by Robert the 1st Friday, May 8, 15 @ 1:08 pm
Would all of the people predicting a constitutional amendment explain to me how it gets on the ballot?
Comment by steve schnorf Friday, May 8, 15 @ 1:09 pm
I am disappointed by the trashing of Nekritz and Biss, the two hardest working and most dedicated legislators in IL.
They were tasked with crafting and negotiating a spread-the-pain solution, not with guaranteeing its constitutionality.
Comment by zonz Friday, May 8, 15 @ 1:11 pm
See I always said don’t borrow money from Peter to pay Paul. If they would have given it back we would be better off.
Comment by NO SENSE Friday, May 8, 15 @ 1:17 pm
@Federalist
“Socialist” was the last name I thought I’d be called on this board. I am “working class” in that I am employed. “Retired class” is something I hope to be someday, because the only other option is death.
Are you my neighbor? I paid around $12K in property taxes last year (west burbs). And with the 5% tax rate, I definitely paid more than $3700. Believe me, I contribute far more than I consume. But this is not a contest I wish to win.
Comment by nixit71 Friday, May 8, 15 @ 1:18 pm
===They are intended to be perpetual===
Forgive me, Father, but I’m aware of that. I’m also aware that the federal government transitioned out of its pension plans long ago.
Comment by 47th Ward Friday, May 8, 15 @ 1:19 pm
I am asking because I do not know, was the legislature’s pension affected by this bill or was there pension left alone?
Comment by 134sparky Friday, May 8, 15 @ 1:19 pm
134sparky, ever heard of the Google?
Comment by Rich Miller Friday, May 8, 15 @ 1:23 pm
1) Gov Quinn, the legislators, and the AG all did the right thing. A decision needed to be made be the IL supreme court to put the issue to rest.
2) Tax retirement income and raise the tax rate
3) Amend the constitution to reduced future accruals and increase employee contributions
4) Assuming the Chicago reform bill is also overturned, those systems will run out of money within 10 years (without other changes), then everything could be back in court figuring out who has to pay the benefits that cannot be diminished.
Comment by Name/Nickname/Anon Friday, May 8, 15 @ 1:30 pm
Yes. I have a pension and I am happy. But I am also concerened that nothing is fixed. But there is a way out. Go back to the bill (Original Senate Bill 1) that President Cullerton and the Illinois labor coalition agreed to but Speaker Madigan dumped. There IS a way out of this that is legal.
Comment by Wroxton Friday, May 8, 15 @ 1:31 pm
The outcome was never in much doubt, but the decision is thoughtful, well-reasoned and frequently eloquent. The Court’s defense of adherence to the Constitution in times of crisis, which Rich quotes above, should make us quite proud of this Court.
Comment by KirkCJenkins Friday, May 8, 15 @ 1:31 pm
47th Ward
“I’m also aware that the federal government transitioned out of its pension plans long ago.”
Not quite. The civilian federal employee is covered by a 3 part program: 1% of salary defined benefit, Social Security, and a Thrift Savings Program (a defined contribution plan where to a certain level the Feds match the employee $ for $, and the administrative cost is 29 cents per on $1,000). Reagan used a hybrid because a straight defined contribution plan would have cost more.
Comment by Anyone Remember Friday, May 8, 15 @ 1:31 pm
=== Would all of the people predicting a constitutional amendment explain to me how it gets on the ballot? ===
This is one of the items on Rauner’s Turnaround Agenda so its part of the so-called “structural reforms” he wants the GA to pass. And I’m not telling you anything new, but GA passage is the only way the amendment can get on the ballot.
Comment by Norseman Friday, May 8, 15 @ 1:32 pm
47th, I’m going to go out on a limb and dispute a fact with you. I think the Federal system is a hybrid — part pension and part DC. That seems like it would be a smart way for Illinois to go, as we move forward.
Comment by Soccermom Friday, May 8, 15 @ 1:33 pm
Oh gosh, 47th — this marks an important moment in our relationship.
I am right and you are wrong. This is, I believe, the first time in a decade….
http://www.plan-your-federal-retirement.com/fers-retirement.html
Comment by Soccermom Friday, May 8, 15 @ 1:35 pm
I also don’t see how a constitutional amendment would actually pass with the voters if it’s actually on the ballot (especially in 2016 like the Governor is demanding.) In 2012, the amendment to make benefits increases subject to super-majority approval couldn’t even muster the support of 60% of those voting on it, and that easily could have been a slam dunk.
Comment by Juice Friday, May 8, 15 @ 1:40 pm
=== Would all of the people predicting a constitutional amendment explain to me how it gets on the ballot? ===
From paragraph 46:
Retirement ANNUITY BENEFITS ARE UNQUESTIONABLY A “BENEFIT OF CONTRACTUALLY-ENFORCEABLE RELATIONSHIP resulting from membership” in the four State-funded retirement systems.
Emphasis added.
This statement it seems to me would close the door on the viability of a constitutional ammendment.
Comment by Sangamo Sam Friday, May 8, 15 @ 1:43 pm
Kudos to the ISC for this expected, but nonetheless very powerful ruling. However, until the pension plans are fully funded and/or the possibility of a change in the Federal Bankruptcy Code allowing states to declare bankruptcy is permanently laid to rest, I still have concerns. The one slender reed I can lean on with respect to the funding issue is this reminder from footnote 3 of the opinion:
Consistent with an earlier opinion by this court in McNamee v. State, 173 Ill. 2d 433 (1996),
and comments at the Constitutional Convention, we did not, however, foreclose the possibility that a
direct action could be brought by pension system members to compel funding if a pension fund were
on the verge of default or imminent bankruptcy. Sklodowski, 182 Ill. 2d at 232-33.
Comment by Andy S. Friday, May 8, 15 @ 1:43 pm
“Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. How we respond is the measure of our commitment to the principles of justice we are sworn to uphold.”
As the kids say, THIS!
Comment by JoanP Friday, May 8, 15 @ 1:44 pm
KirkCJenkins, KUDOS on your good analysis on the decision.
Comment by Norseman Friday, May 8, 15 @ 1:49 pm
Andy S, I guess I don’t fully understand your concerns. What the court was saying there is that even though they are choosing not to compel the State to properly fund the systems right now, they are leaving that door open if the situation deteriorates far beyond where it is today.
Comment by Juice Friday, May 8, 15 @ 1:50 pm
The ISC decision is certainly good news for retirees, and I am glad there are still a few good people in our system that uphold the constitution laws and the sanctity of contracts, but what future do we have when a majority of elected politicians and citizens don’t respect either of those principles?
Comment by grumpy Friday, May 8, 15 @ 1:51 pm
Millionaire tax, state retirement income tax, graduated income tax, cuts to major social programs, state asset liquidation, park property sales to other conservation groups, agency consolidation/privatization, state salary reductions, service taxes, gas tax, sin tax, junk food tax,.etc, etc, etc. Any REAL solution to this mess needs to be brought forward. Time to Pay up for being an Illinois citizen.
Comment by BlameBruceRauner Friday, May 8, 15 @ 2:01 pm
===I am right and you are wrong. This is, I believe, the first time in a decade….===
Lol. I’m wrong a lot too.
I stand corrected. However, my broader point is that perhaps it is time to change public employee retirement plans. I’ll accept the federal model if that’s the best we can do. I just never want to be in this situation, having more than $100 billion in unfunded liability, hanging over our heads.
Once is enough for me.
Comment by 47th Ward Friday, May 8, 15 @ 2:04 pm
Woo-Hoo! Now we retirees can breathe easier. We paid our dues, worked our time and definitely are entitled to be treated right for a change.
Comment by Jay Lo Friday, May 8, 15 @ 2:17 pm
Soccermom - Friday, May 8, 15 @ 11:07 am:
I am not to blame. I saw it coming in the 90’s but was powerless and could not do anything to stop the pension “holidays”.
Comment by Anonymous Friday, May 8, 15 @ 2:25 pm
Thank God for Illinois court judges!
Comment by Mama Friday, May 8, 15 @ 2:51 pm
47th made the comment of moving new hires into a DC plan. This was rebutted with the fact this would keep new money from keeping the existing plans afloat. This would make sense to me if the existing DB plan was pay-as-you-go (PAYG), but it’s not. Can somebody wiser than me confirm this?
As an example, assume the following (percentages used are for illustration only):
Tier 1 employee (covered by SS) -
Contributes 4% of pay toward pension.
State contributes 8% (or whatever is actuarially required).
Contributions earn investment returns.
Employee retires and draws pension equal contributions + investment returns.
Tier 2 employee (covered by SS) -
Contributes 4% of pay toward pension.
State contributes 8% (or whatever is actuarially required).
Contributions earn investment returns.
Employee retires and draws pension less than contributions + investment returns.
In this situation, I see the Tier 2 employees slowly bailing out the state from the previous underfunding. However, the Tier 2 employee is still costing the state 8% of salary in this example.
Under a proposed DC plan, would not the following apply?:
DC employee (covered by SS) contributes 4% of pay into DC account.
State contributes 4% into employee’s DC account.
DC account earns investment returns.
DC employee retires and draws from DC account. State has no further obligation.
I see this as costing the state less than either the Tier 1 or Tier 2 plans (4% of salary vs. 8%). The difference could be used to slowly shore up the underfunding similar to what is currently happening with the Tier 2.
This is where I get confused when people say that moving new hires into a DC plan will further harm the pension funds. I see the DC plan as being cheaper for the state (in my simple example), the difference which can be used to slowly repay pension debt.
I’m not debating the fairness, legality, or political reality of this…just the numbers. But I assume I’m missing something obvious.
Comment by ryan Friday, May 8, 15 @ 2:56 pm
To those mentioning taxing retirement, it might be on the table but it’s easier said than done. Remember that we got into this fix because of politicians being afraid of taking risks to their careers and thus they spent a lot on programs that their citizens enjoyed without sufficient tax revenue to pay for them. There will definitely be political risks if you start taxing retirement income. You just can’t tax state retirees income and exempt everyone else though I’m sure many politicians would love to do so if it were legal. Senior citizens vote in higher numbers than any other age group so the political risk is substantial. the only way it might fly is to exempt a certain level of income, say the first 50k so that many Seniors wouldn’t be affected or only slightly affected.
Comment by The Dude Abides Friday, May 8, 15 @ 3:03 pm
Woohoo! Now I can buy that Corvette!
Comment by Enemy of the State Friday, May 8, 15 @ 3:03 pm
Does the constitution say anything about pay cuts? Maybe in the exact the amount needed to cover the increases? “Strikes” you say? that makes more room for Tier 3 people…
Comment by Careful what you wish for... Friday, May 8, 15 @ 3:08 pm
Anonymous — my point is that we need to move away from blame. We all benefited from the low income tax, even though many of us knew it was dreadful policy. We benefited from the state’s level of services, whether directly or indirectly. So we all bear responsibility for solving the problem.
Comment by Soccermom Friday, May 8, 15 @ 3:08 pm
This kills the Rauner plan. The ISC was crystal clear that pension protection is in place when you join the system. This is a 2.2 B whole in the 2016 budget (of course it always was) that will put even more pressure on the contract negotiations with AFSCME. The only thing left for the state is to clamp down on salaries and try and push the health care coverage as far as they can without inviting another legal challenge for using a back door way to diminish pensions or health care protected premiums.
Comment by facts are stubborn things Friday, May 8, 15 @ 3:14 pm
- zonz - Friday, May 8, 15 @ 1:11 pm:
They knew it was unconstitutional and should be impeached for not upholding their oath of office.
Comment by Anonymous Friday, May 8, 15 @ 3:18 pm
Heard about this earlier but just now starting to read it. It will probably take the weekend to fully read and digest it, but, from the excerpts I’ve read, the general gist seems to be all current workers are also protected.
I’m sure all of you have had time to look at it. To me, while expected, the keys points are 7-0 and the clear affirmation of the lower court decision.
There might be a voluntary way forward to modify terms for existing workers as previously suggested by Cullerton based on Madiar’s research … but it is now crystal clear it would have to be voluntary modification of the pension “contract” … and I can’t imagine anything the State could offer a employee / retiree to get them to voluntarily give up what they have.
I may have some nuances after enough time to digest it.
Comment by RNUG Friday, May 8, 15 @ 3:19 pm
@TDA - Agreed, but I don’t think anyone has mentioned taxing only public sector retirees.
IL is surrounded by states that tax private and public retirement funds but exempt Social Security. That seems like a good place to start.
Comment by nixit71 Friday, May 8, 15 @ 3:21 pm
== tax retirement income above $50,000 excluding Social Security ==
Why would you exclude Social Security if the total income is above $50,000 or whatever the cutoff is?
Comment by nona Friday, May 8, 15 @ 3:22 pm
MJM had the following to say, “Democratic House Speaker Michael Madigan’s spokesman says the speaker will consider the court’s ruling as the General Assembly continues to work on a solution to the state’s pension crisis.”
How about follow it Mr. Speaker!
Comment by facts are stubborn things Friday, May 8, 15 @ 3:23 pm
I am not sure a tax on pension income would be legal…seems like a diminishment of pension benefits in a back door sense. Why not tax pensions 100%. snark
Comment by facts are stubborn things Friday, May 8, 15 @ 3:24 pm
===seems like a diminishment of pension benefits in a back door sense===
If it was only on state and local government pensions it might be. But if it was a broad tax on all retirement income, it likely wouldn’t be.
Comment by Rich Miller Friday, May 8, 15 @ 3:26 pm
taxing retirement income is a nonstarter.
Comment by facts are stubborn things Friday, May 8, 15 @ 3:26 pm
To specifically address this comment:
== is this a shot across the bow at Rauner way of looking at changing pensions? This looks like they are saying all those vested cannot be changed, even from here on out ==
That’s what the court appears to be saying and it is consistent with previous ISC rulings.
Comment by RNUG Friday, May 8, 15 @ 3:27 pm
@nixit71,
Working class vs retired class. WOW! An interesting concept. Does not make much sense, but it is interesting.
Comment by Federalist Friday, May 8, 15 @ 3:32 pm
- nixit71 - Friday, May 8, 15 @ 12:57 pm:
==Considering this argument, I’m assuming that you also support a millionaire tax?==
If it’s written in such a way to tax only millionaires and not some backdoor attempt to bypass the constitution and implement a progressive tax on everyone at all income levels? Sure, tax ‘em.
Again, I will repeat, this is classic socialist/redistributionist mantra.
Comment by Federalist Friday, May 8, 15 @ 3:34 pm
Thank you to the Illinois Supreme Court Justices who voted (7 -0) to uphold the Illinois Constitution!
Thank you to the Illinois Supreme Court for ruling against those among us who would choose which contracts to honor and which ones to violate.
The GA must now find a fair way to raise revenue to pay our state’s fiscal obligations.
Comment by Enviro Friday, May 8, 15 @ 3:42 pm
It should be remembered the pensions are the primary cause of the state’s financial problems. Ask the past and present Governor most members of the GA, the CT, the IPI, the Civic Committee, the Chamber of Commerce and even some on this site.
Now that the ISC has made the obvious, well obviously it is important to attack the retirees in any way you can. Tax their pensions, reduce health care through vastly increased deductibles, co pays etc. and I am certain other things can be dreamed up. Call up the Airline Industry execs they are good at gouging everybody so they ought to have some suggestions.
Always remember, it is the state retirees fault so let’s nail them in any way we can think of. Probably legal, and if not, who cares. That has not stopped the Govenor and GA before.
Comment by Federalist Friday, May 8, 15 @ 3:43 pm
Friday, May 8, 15 @ 3:19 pm:
RNUG — Can Rauner lower my wife’s salary? Can he force her to take furlough days? Can he destroy her health insurance? The last one I am not as concerned about because I have it in my private sector job.
Comment by Anonymous Friday, May 8, 15 @ 3:51 pm
Starting to wade through it in detail.
So far, I’ve found one slight mis-statement of fact (or maybe just some sloppy language). In paragraph 7, the court (describing SERS benefits) states: “They may retire with full benefits at any age if their age plus years of service credit equal 85. ”
That is not completely true. They may retire if they match the “Rule of 85″, but the benefit received is the benefit earned based on the number of years of service. Unless the years total almost 45, the benefit is not “full” (which I interpret as the maximum possible but maybe the court means something different). I think what the court meant was the benefit is not reduced / penalized for retiring before age 60.
It would probably have been better phrased as: “They may retire with non-penalized benefits at any age if their age plus years of service credit equal 85.”
I know … nitpicking … but decisions like this get poured over.
Comment by RNUG Friday, May 8, 15 @ 3:56 pm
Should have added … they do partially clarify it in paragraph 9, but not completely.
Comment by RNUG Friday, May 8, 15 @ 3:58 pm
== RNUG — Can Rauner lower my wife’s salary? Can he force her to take furlough days? Can he destroy her health insurance? ==
Maybe; maybe not. Can’t be more definitive although there are a could of cases where a forced lower salary was seen as a diminishment.
Comment by RNUG Friday, May 8, 15 @ 4:08 pm
- RNUG - Friday, May 8, 15 @ 4:08 pm:
Thanks
My wife told me about you and then I started to read this blog.
Very helpful
Comment by Anonymous Friday, May 8, 15 @ 4:11 pm
“- Soccermom - Friday, May 8, 15 @ 11:07 am: ”
Leave it to a mom to be the adult in the room. Soccermom - Happy Mother’s Day.
Comment by Mama Friday, May 8, 15 @ 4:15 pm
I know this will never happen, but what does it take for Illinois voters to hold Madigan responsible for his decision to balance 2 budgets by skipping 2 years of pension contributions? Why would anyone vote to reelect someone who authored this course of action? Why would any GA member vote for him for Speaker? (I know, because of the campaign finding he provided them!)
Comment by One of the 35 Friday, May 8, 15 @ 4:18 pm
- One of the 35 -,
Thanks. Your “Fire Madigan” t-shirt and mug are on the way!
Comment by Oswego Willy Friday, May 8, 15 @ 4:23 pm
OW: Thanks. I and many other current and former state employees would wear it proudly!
Comment by One of the 35 Friday, May 8, 15 @ 4:26 pm
- RNUG -;
“and I can’t imagine anything the State could offer a employee / retiree to get them to voluntarily give up what they have.”
I would think that a sane approach would be to offer perhaps increased time off, maybe a more flexible schedule, work from home (where feasible), etc… in order to get some to switch. The problem with that would be that the state could not be trusted to not take those benefits away later on and still leave those who switched with the decreased retirement benefits.
Comment by CharlieKratos Monday, May 11, 15 @ 8:14 am