Illinois governor signs pension overhaul into law

[happyslug]

32. If the pension is PRIVATE, you are correct, but these are from the State GOVERNMENT.

And thus the FEDERAL CONSTITUTION comes into play, as to Contracts and Property Rights. It is the FEDERAL CONSTITUTION that forbids the states from impairing Contract (States may have similar provisions, but they are NOT needed given the Supremacy of the US Constitution).

The courts have Long adopted the position that any "Grant of right" from any Government is a Right to property. This includes the right to stay in Public Housing (there is NO right to get into Public Housing, but once in, you can only be removed for "Good Cause" for otherwise you are denying that resident of Public Housing Their property right to lived in that Apartment. Now that right to housing once you are in does NOT extend to private Landlord Tenant law, for the right to live in such a private rental property is NOT a grant from the State, but from the owner of the property. Thus the States can pass laws making it much easier for Private landlords to evict a Tenant then any Public Housing Authority can.

I bring up Public housing for people do not think such housing is a "Property Right" but the courts have long adopted that policy, on the simple grounds that the Housing Agency is an Agency of the State and any grant of any right from that agency, including the right to live in a rental unit, is a grant from the State and thus a right to property (In the case of Public Housing the right to live in the unit as long as you want if you do not violate an other term of your lease).

The same thing with Pensions, State Pensions are Grants of Property rights (a pension) to State Employees as part of such employees CONTRACT to work for the state. Notice this applies to STATE pensions only NOT to private pensions, for Private Pensions are NOT grant of a Right to a Pension from the State. Thus property rights do NOT kick in to private pensions EXCEPT under the CONSTITUTIONAL ban for the State to Impair Contracts.

Now, the Federal Government does have the right to Impair Contracts, and thus it has been the Federal Bankruptcy Courts that have ordered the reduction in private Pensions payouts. The problem is there is NO provision in the Federal Bankruptcy Code for a State to File Bankruptcy. Local Government may file Bankruptcy, if permitted by State law to do so (Which was the holding of the Courts in California when some Municipalities filed Bankruptcy recently).

Thus the real issue can the State reduce its pension obligations? Given Pensions are not given freely, but part of the Contract to work, the Contract clause kicks in. Given the Pensions are a right from the state, it is also a property right. Even the Federal Government can NOT take away property without compensation, i.e. can NOT abolish a pension without paying the pension.

Now, the Federal Government CAN IMPAIR a contract, and has done so in Federal Bankruptcy Court and when you read about Pensions being reduced it is being done in Federal Bankruptcy Court (This includes times when it is a municipal Pension that is reduced).

Private pensions can be reduced by the parties (mostly in Federal Bankruptcy Court). I will NOT go into the debate if a State can file Federal Bankruptcy. The Bankruptcy act does permit local government to file bankruptcy, but the US Supreme Court has ruled that can be done ONLY if permitted by State law (in The Detroit Bankruptcy that is an issue, the Governor says he can give such permission, the union for the workers say such permission is NOT permitted under the State Constitution, Bankruptcy Court has rejected the Union's position, but let see what happens on appeal).