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.
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"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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