On Friday the Illinois Supreme Court forced the state to come up with another way of fixing the worst government-employee pension crisis which the nation has ever faced. According to the ruling lawmakers have exceeded the limit by enacting a law which cut the retirement benefits in order to confront a huge budget deficit. According to Governor Bruce Rauner’s administration the situation calls for a constitutional amendment.
In 2013 the pension reform measure was signed by former Governor Pat Quinn in an unconstitutional cutback of benefits. The seven justices declared in a unanimous decision that the law signed by the former governor 18 months ago disregards the state constitution.
The impoverished state must once again struggle with a $111 billion deficit in covering its employee retirement obligations. The gap is so deep that in recent years the state had to reserve one fifth of the annual operating funds (up to $7 billion) to keep the pace.
Democratic Representative Elaine Nekritz who is one of the main sponsors of the measure in the House claims that this decision makes advancement difficult. According to him the ways in which a balance can be reached are limited. He is of the opinion that Illinois will have to deal with this problem in the following 40 to 50 years.
The plan which was rejected by the justices was supposed to trim the massive shortfall over 30 years by gradually but noticeably by reducing pension benefits with a 3% annual adjustment erasure. The ruling raises major problems for new Republican Governor Bruce Rauner and Democrats who are in charge with the General Assembly.
According to Nekritz the state of Illinois would in the end owe a quarter for every dollar of income to pay for pensions
which will channel form other important state services such as education. John Cullerton, Senate President , declared:
“Ruling is a victory for retirees, public employees and everyone who respects the plain language of our Constitution.”
Most states went through the problem of public employee pension crisis which was enhanced by the recession and they took measure to ameliorate the problem. What Illinois did was hesitate until Quinn and Democratic lawmakers got over the opposition from union allies and closed the deal without taking notice of the warnings that it may not pass a court challenge.
Although this decision does not give any clue to what should be done next, according to the court other option to how to deal with the economic crisis is to raise taxes.
Image Source: In These Times