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February 20, 2014

In a case scrutinized for potential ramifications for pension reform in Illinois, the Arizona Supreme Court today ruled unconstitutional efforts to curtail benefit increases for retired judges.

Yet Illinoisans may not want to read too much into the ruling because the Arizona case involved only retired judges, a class of pensioners exempted from pension law changes in Illinois.

Benefit cuts affecting compounded cost-of-living increases for other retired state employees, enacted in December, are being challenged before the Illinois Supreme Court.
A spokesman for Illinois House Speaker Michael Madigan, an indispensable factor in passage of the legislation, declined to comment on the Arizona developments, as did a spokeswoman for Senate President John Cullerton, D-Chicago. Mr. Cullerton was another key backer of the legislation while voicing doubts about its constitutionality.
Other state leaders were not immediately available for comment.

WHAT ARIZONA AND ILLINOIS HAVE IN COMMON

The Arizona case has been on the local radar because Arizona and Illinois are, along with New York, the only three states with constitutionally mandated protections for state pensions.

“My one-word comment is 'predictable,' ” said Ralph Martire, executive director of the Center for Tax and Budget Accountability, on today's ruling. “All the Arizona Supreme Court did is read the plain language and said there's no need for legal construction here: The language is plain on its face. Hence, it's unconstitutional.”

At the same time, noting that Illinois Supreme Court justices are elected officials themselves, Laurence Msall, president of the watchdog group Civic Federation of Chicago, said, “Illinois' financial situation by any measure is far more precarious than Arizona's, and it is against that backdrop that the courts will eventually rule.”

Mr. Martire points out that, should Illinois justices rule in favor of reductions in plans for other state employees, the justices likely would face retribution in the form of legislated changes to their own benefit plans.

 

Source: Crain's Chicago Business