Politics & Government

Schwarzenegger eyes revamp of California's pension programs

SACRAMENTO — Weeks after wrapping up a deal to close a $26 billion budget deficit, Gov. Arnold Schwarzenegger is taking aim at what he calls California's next great fiscal problem: the state's battered pension system.

Reviving an idea he floated during budget negotiations in June, Schwarzenegger wants legislation creating a two-tier system that would deliver lower benefits to newly hired public employees — not only state workers but firefighters, police officers, teachers, and other local-government employees.

Along with proposed cutbacks in retiree health benefits, Schwarzenegger says, the plan would save $90 billion over the next 30 years.

The Republican governor says the state's pension system faces tens of billions of dollars in unfunded obligations and is increasingly unaffordable.

"We cannot continue promising people things that we cannot deliver," Schwarzenegger said at a July press conference.

Public-employee pensions have long been politically untouchable in California, and Schwarzenegger's previous attempt to overhaul the system flopped.

Things might be different now.

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