(August 23, 2010) — Republican California Governor Arnold Schwarzenegger is seeking $2 billion from the $211.4 billion California Public Employees’ Retirement System (CalPERS) to credit the state.
To erase a $19 billion state budget deficit, the governor has proposed a reduction in public worker pensions to 1999 levels, refusing to sign any budget that doesn’t contain the cuts. Schwarzenegger would count the $2 billion as an advance on the roughly $74 billion he estimates in savings during the next three decades from his proposals to roll back pension benefits for government workers, Bloomberg reported. The advance would come from pension cuts projected to save $93 billion over 30 years.
Still, Republicans and Democrats lack a solution over whether to use higher taxes or spending reductions to lower the state’s deficit. With California still lacking an accepted budget, negotiators are considering alternatives to generate savings, such as borrowing or deferring payments, The Sacramento Bee reported.
The state is required to pay $3.9 billion this fiscal year to CalPERS in order to finance retiree costs, up from $145 million a decade earlier.
To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742