Judge says 2014 Chicago pension overhaul unconstitutional

CHICAGO (WLS) -- A Cook County judge has thrown out a 2014 law aimed at reducing multibillion-dollar shortfalls in two Chicago pension funds, noting that the law is unconstitutional.

The retired city workers who opposed the pension reform law crowded the Daley Center to receive copies of the ruling as soon as it was released on Friday.

The ruling is a major blow for the city, which hoped to eliminate $9.4 billion unfunded pension liability by cutting benefits and increasing contributions. It would affect about 61,000 city employees and retirees.

"I think it's a victory for the retirees," said Barry Berman, a retired city worker.

Mayor Rahm Emanuel is in Europe and has not commented on the ruling. In a written statement, city attorney Stephen Patton said the city will appeal and looks forward to having its arguments heard by the Illinois Supreme Court.

"While we are disappointed by the court's ruling, we have always recognized that this matter will ultimately be resolved by the Illinois Supreme Court," Patton said in a statement.

"The highest law of our state, the Constitution, has meaning and its integrity has been upheld today," said Anders Lindall, of the AFSCME Local 31.

Lindall also said he hopes the city does not "waste further time and taxpayer dollars on an appeal."

Workers, retirees and labor unions sued, saying the Illinois Constitution protects retirement benefits, noting that benefits cannot be diminished or impaired. Novak agreed, citing an Illinois Supreme Court ruling earlier this year that said similar changes to state pension funds were unconstitutional.

"Why should the city workers carry all of this burden on their backs, the ones that are retired?" asked Charles Lomanto, a retired city worker.

The 2014 ordinance combined increased payroll deductions from active city workers, reduced retiree cost-of-living adjustments with higher taxes from city residents. The savings and new taxes would generate the revenue needed to pay down the billions of dollars in unfunded pension debt. Emanuel negotiated the proposal with 27 of the 31 unions representing current non-public-safety employees,

"The Civic Federation believes in these reforms. They were negotiated with the employees before they were implemented," said Sarah Wetmore, of the Chicago Civic Federation.

Ald. Carlos Ramirez-Rosa (35th Ward) said: "It's now time for the city to meet its obligation it made to retired workers."

Ramirez-Rosa believes an appeal will also rule against the city and that officials need to now start figuring out how to pay pensions in a way that doesn't overburden poor and middle-class Chicago residents.

"What we have to do now is decide, 'Are we going to ask the regular Chicagoan to dig deeper into their pockets or we're going to ask the big corporations and the super-wealthy to pay their fair share?'" he asked.