No surprise that Illinois’ Tier 2 pension law being challenged in court given how it was passed – Wirepoints Quickpoint
The law was bulldozed through in 2010 by House Speaker Michael Madigan and Senate President John Cullerton in less than 12 hours with no analysis, debate or actuarial assessment.
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I think the dimishment clause in the constitution only applies to the payouts, not the funded ratio? There is no constitutional requirement to keep any pension at a particular healthy funding ratio. Just that they get their checks and increases. So just honor that, let the pension funds run out, then continue honoring the constitutionally required payouts on general revenue appropriated by simply stopping all services on anything else. Constitutionally there is no need to borrow 10b just to improve the ratio.
IL courts have made clear that, yes, there is an obligation to contribute to the funds at some point before they run completely dry. A court ordered tax increase just to fund a pension is in place in Harvey. Nobody knows exactly where the magic point is, but nobody is arguing Chicago is there yet.
By that logic… When the taxpayers in Harvey are tapped out and all home equity confiscated by property tax and short sales or foreclosure… the next step would be a court ordered bond offering, court forced borrowing? Or a court ordered reduction in Harvey’s payroll to make cash available for the pension, court forced firings? Or a court order to begin liquidating any remaining Harvey assets to raise cash? God forbid the court should ever consider ordering a bankruptcy! The court was foolish to further erode the towns and citizens meager equity. It should have simply ordered up a bankruptcy… Read more »
Forget pensions, let’s do something like POB’s for student debt. Once repayment kicks in on a graduate’s college loans, grant them a giant loan to invest it in the stock market, then they make the student loan payments with all those guaranteed stock gains plus money left over to pay the rent on their studio apt and morning lattes. Win-win.
The Nixit Principle will revolutionize personal finance.