Yesterday, Greg Hinz reported that S&P “leaned on the Mayor” to cut COLA benefits in order to restore the city’s credit standing.
The other day the Mayor smartly walked back her earlier mixed-messaging about COLA cuts and constitutional changes to the pension protection clause.
S&P Global Ratings, according to Hinz, is telling the Mayor Lightfoot “to reduce the 3 percent annual compound COLA that about half of the city’s retirees now are scheduled to receive, perhaps by amending the Illinois Constitution.”
First of all, because it clearly can’t be said enough, pension benefits are not the cause of the pension debt.
The city’s pension problems go back over a quarter century when it began to decrease its contribution to the public pension systems.
Second. And it can’t be said enough. The Supreme Court of the state of Illinois has ruled that any diminishment of benefits is illegal.
Third. And it can’t be said enough. Even S&P Global Ratings can’t change contract law. That would puts the kibosh on retroactively taking away pension rights. Even with a change in the language of the Illinois Constitution.
As Amanda Kass commented when the Mayor misspoke to Crain’s last week:
Regarding the COLA: