A judge said he will rule Friday on the constitutionality of the landmark Illinois pension patch after hearing arguments about whether the state can use the crisis of a $100 billion retirement-fund debt to cut benefits to retirees.
The decision by Sangamon County Circuit Judge John Belz, who heard about 45 minutes of oral arguments Thursday, could determine whether the case is appealed to the Illinois Supreme Court. Belz had indicated in September that's a likely place for the case after the high court ruled separately in July that a plan to require government retirees to pay more for health insurance was unconstitutional.
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The pension overhaul — which would slice the debt in five state pension systems by reducing benefits to retirees while also slightly reducing the contributions they must pay — prompted five lawsuits, later consolidated, by groups representing government employees and retirees. The lawsuit argues that the state's 1970 Constitution prohibits action to "diminish or impair" pension benefits.
"The language in the pension protection clause of the Constitution is plain and unambiguous; it has no exceptions," said former appellate court justice Gino DiVito, representing retired teachers. "It should be applied as stated."
But Assistant Attorney General Richard Huszagh, defending the law, argued that the Constitution notes that membership in a pension system is "an enforceable contractual relationship," which the state can change. He invoked the "sovereign power" of the state to take extreme actions during crises. As he put it, "In case of fire, you need to break the glass."
"Contractual rights are never inviolable," Huszagh said. "There is in emergencies and other extraordinary circumstances the ability of the government to modify contractual rights."
If the high court considers and strikes down the law, it could mean an extra headache for incoming governor Bruce Rauner, a Republican, who already faces uncertain revenues in putting together a state budget.
The law, approved by lawmakers and Gov. Pat Quinn in December 2013, would reduce the billions of dollars the financially struggling state has put toward pensions in recent years to try to catch up on the deficit.
Huszagh contended the Detroit bankruptcy case bolsters his stance. There, a federal judge approved a plan this month for the city to emerge from bankruptcy protection in part by cutting the pensions of 12,000 city retirees by 4.5 percent. Huszagh said the judge rejected a similar argument against diminishment because of the bankruptcy problems — although his decision isn't binding on any other court.
Contact John O'Connor at https://twitter.com/apoconnor