CHICAGO - The Civic Committee of the Commercial Club of Chicago said it plans an initiative to promote a dialogue on the consequences should the Illinois Supreme Court overturn pension reforms adopted last year.
The committee on Wednesday announced the "What If?" initiative with a mailer being distributed to elected officials, businesses, schools, social services providers, civic groups, and media outlets with a direct appeal to organizers of candidate forums and editorial boards to put the question front and center.
The influential group made up of the region's senior executives had previously launched an advertising campaign underscoring the need for pension reform and pressed for passage of the package approved by lawmakers.
"While the Illinois General Assembly did its job and passed meaningful legislation, the state remains in a very difficult position," said attorney Ty Fahner, president of the Civic Committee. "All elected officials and candidates, especially those running for election or re-election this fall, must answer the question, 'What If' the court overturns the law?"
The group is warning that taxpayers may have to shoulder replacing the $145 billion in pension payment savings expected over 30 years through higher taxes and service cuts. Severe cuts to education and social services could be in store as well as hikes in public college tuition.
"It's not an easy conversation to have, but it certainly is the right thing to do given what's at stake. Now is the time to have this conversation," Fahner said.
Lawmakers have been focused on the November general election and little public discussion has been held on a backup plan should the state courts overturn the reforms.
A series of lawsuits filed by employees, former employees, and unions have been consolidated in Sangamon County Circuit Court. They argue the pension changes violate the state constitution's pension clause that protects benefits from being impaired or diminished and says they are protected by contract laws.
Illinois, being represented by Attorney General Lisa Madigan, in its early arguments has countered that it acted within its sovereign authority to alter a contract in passing pension reforms given its precarious fiscal condition and the size of its unfunded pension obligations - more than $100 billion.
The state has argued that after passing an income tax hike and spending cuts, it had little choice but to cut benefits to deal with the pension burden. The state also lowered employee contributions in "consideration" of the cuts.
The legislation limits cost-of-living increases, caps pensionable salaries, and raises the retirement age for some, while cutting employee contributions by 1%, shifting contribution calculations to a more actuarially sound method, and gives the pension funds enforcement rights over state payments.
Much of the expected savings stem from the COLA increases annuitants now receive. The state filings target the existing automatic COLA as a key driver for the rising pension burden and argue those adjustments "are not part of the core pension benefit."
While the cases are still at the circuit court level, the Illinois Supreme Court will ultimately have the final word. Some believe the court's finding over the summer that retiree healthcare benefits are protected by the pension clause bodes ill for the pension changes.
The state's rating has dropped over the last several years to the A-minus level, the weakest among states, due to its pension and budgetary strains. All rating agencies assign a negative outlook.