Constutional Law

Illinois state pension law declared unconstitutional

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A landmark state pension law was declared unconstitutional Friday by the Illinois Supreme Court.

Justice Lloyd Karmeier, writing for a unanimous court, said the law violated a provision of the Illinois Constitution known as the pension protection clause, which says public employee pensions cannot be diminished or impaired, the Chicago Tribune reports.

The 2013 law, which was designed to address a $105 billion state pension shortfall, would curb automatic and compounded annual cost-of-living increases for retirees, extend the retirement age for state workers and limit the amount of a worker’s salary that would be used to calculate pension benefits.

Karmeier, in his ruling, rejected the state’s contention that economic necessity trumped the state constitution’s pension protections.

“Our economy is and has always been subject to fluctuations, sometimes very extreme fluctuations,” he wrote.

The judge also faulted the legislature for letting a 2011 temporary income tax increase of 5 percent revert to a lower rate of 3.75 percent at the start of the year.

“While [the General Assembly] 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,” he wrote.

The ruling upheld a decision last year by Sangamon County Circuit Judge John Belz, who held that state constitutional protections for pension benefits were “absolute and without exception.”

The decision was applauded by a coalition of unions representing retirees and government workers.

“We are thankful that the Supreme Court has unanimously upheld the will of the people, overturned this unfair and unconstitutional law, and protected the hard-earned life savings of teachers, police, fire fighters, nurses, caregivers and other public service workers and retirees,” Illinois AFL-CIO President Michael Carrigan said in a prepared statement.

But Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago, said the decision produced no winners.

“If there’s any good news, it’s that Chicago and Illinois are resilient, and we’ve responded to great challenges before,” he said.

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