Is this story familiar? Chicago sued by pensioners
Chicago has passed MODEST pension reforms, set to take effect Jan 1. Pensioners have now sued, alleging that those cuts violate the Illinois Constitution. The provision in question, by the way, is almost word-for-word Section 24 of the Michigan Constitution.
http://www.chicagotribune.com/news/l...216-story.html
When the IL Supreme Court holds the cuts violate the State Constitution [[which they will, the IL SC already ruled that modest cuts to health care benefits violated the IL Const), Chicago will have three choices:
1. Raise taxes to pay for these pensions [[unfunded pension liabilities, as of 2012, were approximately $37.2 BILLION). Query whether the local economy can stomach a tax hit that high.
http://www.chicagobusiness.com/artic...kely-to-double
2. Cut services.
3. File for bankruptcy.
I believe the Germans call this "schadenfreude."
The American Way to live for free without having to work?
The city of Littletown Michigan has 125 citizens and elects a new mayor.
The newly elected Mayor establishes a Department of Public Beautification.
The mayor hires all citizens to be part of the new department for $1.00 a year each. They all agree.
The citizens form a labor union and ask for a $100,00.00 a year pension payable for life after 1 year of service.
The Mayor agrees.
After I year and I day of service, all citizens retire.
The city cannot pay and files for bankruptcy.
The courts say the state is responsible for all public pension obligations
The citizens of Littletown all move to Florida and live a comfortable retirement for the rest of their lives.
Happily ever after. The American Dream
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The State Law "Michigan State and Local Government Retirement Systems"
"The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby. Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities."
Sooooooooooooooooo, based on this, if Littletown is not responsible for its pension plan to its former employee’s, then every city can just purposely underfund the plan it has with it's union employs and claim bankruptcy.
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Merry Christmas and God Bless America!
New Littletown, Flordia. A nice place to live.
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