Illinois Justices Overturn State Landmark 2013 Pension Law

[AuH20]

http://cdn3.vox-cdn.com/assets/4673605/3666136-5719310562-13266_medium.jpg

http://www.foxnews.com/politics/2015/05/08/illinois-justices-overturn-state-landmark-2013-pension-law/


The Illinois Supreme Court on Friday struck down a 2013 law that sought to fix the nation's worst government-employee pension crisis, a ruling that forces the state to find another way to overcome a massive budget deficit.

In a unanimous decision, the seven justices declared the law passed 18 months ago violates the state constitution because it would leave pension promises "diminished or impaired."

"In enacting the provisions, the General Assembly overstepped the scope of its legislative power. This court is therefore obligated to declare those provisions invalid," Justice Lloyd Karmeier said in writing the court's opinion.

The decree puts new Republican Gov. Bruce Rauner and Democrats who control the General Assembly back at the starting line in trying to figure out how to wrestle down a $111 billion deficit in what's necessary to cover its state employee retirement obligations. The hole is so deep the state has in recent years had to reserve up to $7 billion -- or one-fifth of its operating funds -- to keep pace.

[Anti Federalist]

Just raise taxes...oh, wait.

[AuH20]

Just raise taxes...oh, wait.

There is no plan B like you stated, since they would likely drive the remainder of their tax base to another state. Illinois is going to burn, especially when they can't borrow like they used to.

[AuH20]

A little background tidbit.................The Police and Firemen are always looking out for the local community......

http://chicago.suntimes.com/chicago-politics/7/71/596964/police-fire-pensions-chicago-property-tax-casino


Fraternal Order of Police President Dean Angelo on Monday urged Mayor Rahm Emanuel to impose a temporary property tax increase to shore up police and fire pensions that could be rolled back when the jackpot of revenue from a city-owned Chicago casino comes rolling in.

Temporary? haw haw

[Occam's Banana]

Just raise taxes...oh, wait. Nah, raising taxes would be too prosaic. These problems can only be dealt with by bold & creative leaders who are willing and able to "bite the bullet" and do what really needs to be done.

Consider, for example, the idea for dealing with New York state's pension woes that was floated by NY Guv Andrew Cuomo a while back: tide the pension over by borrowing - from the pension - whatever is needed.

(I trust that no description of the degree of brilliant genius inherent in such a plan is needed ...)

[libertyjam]

Famous Doonesbury book: "...But the Pension Fund was just Sitting There!"

[Anti Federalist]

Famous Doonesbury book: "...But the Pension Fund was just Sitting There!"

Duke, or course it had to be Duke.

http://www.gonzo.org/pics/otherb/fundduke.jpg

[Anti Federalist]

http://thesuperslice.com/wp-content/uploads/2012/07/PC-13-Doonesburys-Uncle-Duke-.gif

[Anti Federalist]

Moody's downgrades Chicago debt to 'junk' with negative outlook

http://www.cnbc.com/id/102650351

Moody's downgraded Chicago's credit rating down to junk level "Ba1" from "Baa2."

The announcement, which the ratings agency released Tuesday afternoon, cited a recent Illinois court ruling voiding state pension reforms.

Moody's said it saw a negative outlook for the city's credit.

Following that May court decision, Moody's said it believes that "the city's options for curbing growth in its own unfunded pension liabilities have narrowed considerably."

"Whether or not the current statutes that govern Chicago's pension plans stand, we expect the costs of servicing Chicago's unfunded liabilities will grow, placing significant strain on the city's financial operations absent commensurate growth in revenue and/or reductions in other expenditures," the agency said in a release.

The downgrade affected $8.9 billion of general obligation, sales, and motor fuel tax debt, according to Moody's.

The firm said its downgrades could trigger up to $2.2 billion in accelerated payments on Chicago debt.

[Anti Federalist]

Just raise taxes...oh, wait.

How naive of me, that is just what they are kicking around.

Municipal money matters: Why Chicago is not the next Detroit

http://www.cnbc.com/id/102662409

The broader economic and demographic positions of the two cities are vastly different. Chicago is the third-largest city in the country, with a vibrant economy and large, taxable population. Detroit had been suffering from a population exodus for decades, along with a crippled economy after much of the auto industry moved out.

"A property tax increase could solve Chicago's problems tomorrow," Fabian said. "But the city has chosen not to do that, even though it has the potential." Chicago could raise taxes by 50 percent and still have lower taxes than New Jersey, he said.

[Occam's Banana]

How naive of me, that is just what they are kicking around.

Municipal money matters: Why Chicago is not the next Detroit

http://www.cnbc.com/id/102662409

The broader economic and demographic positions of the two cities are vastly different. Chicago is the third-largest city in the country, with a vibrant economy and large, taxable population. Detroit had been suffering from a population exodus for decades, along with a crippled economy after much of the auto industry moved out.

"A property tax increase could solve Chicago's problems tomorrow," Fabian said. "But the city has chosen not to do that, even though it has the potential." Chicago could raise taxes by 50 percent and still have lower taxes than New Jersey, he said.

And, of course, let's just ignore the question of why "Detroit had been suffering from a population exodus" ... I mean, there's obviously nothing to learn from Detroit vis-a-vis government interference in the economy ... and anyway, "Chicago is the third-largest city in the country, with a vibrant economy and large, taxable population," so there ougtta be LOTS of blood that can be sucked from that fat, juicy tidbit before it's as shriveled and dried-up a husk as Detroit is now ...

[Cap]

Have they considered simply lowering the bar on asset forfeitures?

[Carlybee]

Just tax the rich people. That's basically what's happening in NYC. I mean they won't move or set up residence in another state or anything.

[Occam's Banana]

Have they considered simply lowering the bar on asset forfeitures?

The DEA & cops would never stand for it. Our stuff is THEIR stuff - and those pantywaist pension pencil-pushers (say that ten times fast) can just go find their own damn milch cow.

[AuH20]

Hmmmmm? Black robed thieves or poly-tick-ians?

http://www.forbes.com/sites/danielfisher/2015/05/13/illinois-pension-clash-raises-question-who-raises-taxes-lawmakers-or-the-courts/


Fine words, but there’s still a question about how the Illinois Supreme Court will back them up. Article XIII of the Illinois Constitution may protect public pensions, but Article IX says the General Assembly has the exclusive power to raise revenue. So what if the Supreme Court orders the State Treasurer to turn over tax revenue to fund pensions and he refuses?

“You’re talking about a potential constitutional crisis in that case,” said Jack Beermann, a professor at Boston University School of Law and expert on pension law. While the Illinois Supreme Court could conceivably clap the treasurer in jail for contempt, he said, “legislators are immune from any sort of legal process to force them to follow the law.”

Usually it doesn’t come to this, and it well might not in Illinois, either. Similar conflicts are brewing in other states with underfunded pension plans including Connecticut and Rhode Island, as voters rebel against paying higher taxes to fulfill promises legislators made to public employees years before.

“In most states a combination of reasonable, moderate reforms and increases in employee contributions will allow them to limp along and not get crippled by it,” Beermann said.


Now the state’s pension problems are so severe that it would have to raise more than $20,000 per citizen to provide the funding for the promises it has made state employees over the years. As of mid-2013 the five state pension systems were funded at 41.1% — actually lower than the 41.8% level before Article XIII protection pensions was added to the Constitution in 1970


While conservatives paint this as a fight between voters and public sector unions, which use mandatory dues to finance the campaigns of politicians who support richer pensions, Beermann said public employees have always had outsized influence in electoral politics. Ultimately, he said, “the taxpayers really did this to themselves.”

“It’s the classic case of deficit spending,” he said, where politicians pretend they are balancing state budgets each year but allow hidden deficits to pile up in their pension plans. Ironically, Beermann’s research shows that the biggest deficits tend to be in states where the courts have most rigorously enforced laws requiring balanced budgets.

Luckily for federal taxpayers – if not retirees – the Contract Clause applies only to state laws.