Politics & Government

California's pension plan proposal placed on hold

California will not impose a two-tier pension system promising lower benefits to future state workers as part of any wide-ranging deal to solve its $26.3 billion budget shortfall, The Bee has learned.

The controversial proposal by Gov. Arnold Schwarzenegger has been shelved in budget talks, but options for cutting pension costs are expected to be discussed again in coming months.

Democratic leaders, emerging briefly from the Governor's Office on Tuesday evening after five hours of negotiations, said they planned to stay in the Capitol "all night" if necessary to strike an overall deal.

"Everyone is highly motivated to get this done, and get this done tonight," said Senate President Pro Tem Darrell Steinberg, D-Sacramento.

Schwarzenegger's pension plan never was intended to affect existing employees, whose pay already has been cut nearly 15 percent through imposition of three unpaid furlough days per month.

Carroll Wills, of California Professional Firefighters, applauded the decision to move more slowly on pension reform, saying it made no sense to jam a proposal through the Legislature with "a fiscal gun pointed to its head."

"The pension discussion, to the extent it needs to take place, (should) be a deliberative process of the Legislature," said Wills, who contends that a two-tier system of benefits pays employees unequally for equal work.

The economic slowdown has hit the pension system hard, sending investment income plummeting and sparking pressure to alter defined benefits that are more lucrative than typically offered within private industry.

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