Pension reform main focus in Springfield

From Illinois News Network
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The Illinois Supreme Court is set to hear both sides of an argument over pension reform.

The Wednesday afternoon hearing will feature several attorney firms representing the five plaintiff groups who oppose the change to retirees pensions moving forward.

The state is also expected to feature their argument that they have the power to change contracts given the extraordinary financial situation facing Illinois. Attorney Aaron Maduff, who represents the State Universities Annuitants Association, says the expedited hearing and a handful of amicus briefs siding with the state has increased their work but Maduff says regardless the state’s argument is wrong.

“From the plaintiffs’ view, all of us together, I think we all agree that the pension clause is not subject to the police powers, that the Public Act 98-0599 violates the pension clause and as such is unconstitutional.”

State Representative Elaine Nekritz, who is considered one of the chief architects of the pension reform law, says there are other requirements the state must balance.

“This is not unusual, we do this every year when we create a budget with what is our inevitably limited resources. We have to balance competing constitutional claims.”

Impact in Chicago

There will be impacts on the City of Chicago and other municipalities struggling with pension debt with the outcome of the case. Nekritz, says a decision striking the law down wouldn’t only harm the state, but it could also harm cities like Chicago that are struggling with large amounts of pension debt of their own.

“If the pension clause is absolute the City of Chicago is a much more dire situation than the state is and needs more significant relief. I would hate to see the city of Chicago end up like Detroit.”

Jim Spiotto, managing director at Chapman Strategic Advisors and a municipal restructuring expert, also says if the pension reform law is thrown out there will be municipal impacts, but Spiotto says this is an issue of providing some certainty to retirees.

“But there should be an assurance that this is to make sure they get paid as much as reasonably can be paid but that they don’t, and others, suffer the long term harm of possibly not paying for services, not funding services today, which creates bigger problems tomorrow.”

Representative Nekritz says another aspect of the challenged law would increase the overall funding of the pension systems. The court will hear oral arguments from the state and from four firms representing five different groups of retirees Wednesday in Springfield. It’s unclear if the court will rule from the bench or provide a ruling weeks later before the end of the current fiscal year.

Local fund cuts debated

Shared sacrifice was the focus of a Senate Appropriations committee hearing Monday. With proposed cuts in the local distributive fund for municipalities across the state several mayors and other groups addressed the committee urging lawmakers to go in another direction. Republican State Senator Chris Nybo said the proposed reductions are a much needed haircut. But Voices for Illinois Children’s Emily Miller said it’s not just a haircut.

“But you’re not just asking for one haircut. You’re asking for them to compromise the services their communities have used to grow stronger over the years.”

Nybo responded that if cities don’t take a haircut, Illinois could be capitulated.

“From my perspective, the state of Illinois is facing a guillotine that is about to chop its head of because things are in such terrible condition.”

But several mayors addressed the committee saying there needs to be talks about new revenue, rather than just cuts. Other committee members said there has already been shared sacrifice with increased costs municipalities take on every year. Governor Bruce Rauner proposed cutting the local distributive fund in the upcoming fiscal year.

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