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Schwarzenegger Delays Calif. Pension Overhaul
By Jenny O'Mara, Reuters
April 7, 2005
California Gov. Arnold Schwarzenegger backed off from one of his top priorities on Thursday, saying he would not push for a statewide vote this year on partial privatization of the state's massive public pension funds.
The Republican governor said he would back overhauling the state pension funds as a ballot measure next year if lawmakers fail to craft compromise legislation on the controversial issue, which mirrors Bush administration aims for private accounts within Social Security.
The California Public Employees' Retirement System and the California State Teachers' Retirement System, the largest and third-largest U.S. pension funds, both opposed the plan.
Supporters could use extra time to improve the ballot measure, the celebrity governor said, referring to claims by firefighters and police officers that the existing proposal threatened to scrap their disability and death benefits.
"I think it is better to improve the language and put our plan on the June 2006 ballot," he said. "Now while this will be a delay for our initiative, I'm hopeful that refining the language and to protect the death and disability benefits will spark a whole new fresh start in the legislature."
Schwarzenegger's retreat comes as the very high popularity of the former Mr. Universe has fallen somewhat in recent polling months. A June 2006 ballot would come less than half a year before the November gubernatorial election.
"It's obvious the glow of the Schwarzenegger governorship has worn off," said Larry Gerston, a political scientist at San Jose State University. "The public a year ago issued him a blank check and the legislature demurred appropriately, but now that blank check is no longer cashable."
Democratic lawmakers and unions claimed a major political victory over Schwarzenegger.
"We welcome his retreat on the initiative that would in essence curtail the ability of state employees who ... make $36,000 on the average, (and) felt threatened by the governor's pension initiative, as did widows because of the death and disability benefits," said Assembly Speaker Fabian Nunez, the chamber's top Democrat.
Schwarzenegger said in January that if the state's Democrat-controlled legislature did not help him craft a plan to overhaul state pensions, he would take the issue to voters.
Lawmakers failed to act and Schwarzenegger's allies started gathering signatures to qualify a ballot measure that would place new public employees into defined-contribution retirement accounts similar to private-sector 401(k) accounts.
California's public employees, including teachers, are in defined-benefit retirement plans that provide fixed payments during retirement. Schwarzenegger says the cost of payments and associated benefits are rising too quickly and burdening the state's wobbly finances.
His plan enraged powerful public employee unions, along with the broader labor movement, including the AFL-CIO. They rallied opposition among members and Democrats, who linked Schwarzenegger's plan to the Bush administration plans for Social Security, and major public pension funds backed them.
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