California Gov. Arnold Schwarzenegger has proposed borrowing $2 billion from the California Public Employees' Retirement System to help bridge the state’s budget deficit.
The Sacramento Bee reports that the borrowing would represent an advance against future savings from planned pension cuts. The newspaper quoted sources close to the negotiations who would not be identified because of the sensitive nature of the talks.
Schwarzenegger, a Republican, is demanding that state lawmakers pare pension benefits for newly hired state workers to pre-1999 levels as part of any budget agreement. The sources told the Bee that Calpers would be repaid with savings from the benefit cuts, estimated by Schwarzenegger at $93 billion over 30 years.
California’s government has been wrestling with a budget deficit estimated at $19 billion. Schwarzenegger recently ordered workers to be furloughed three days a month, following a previous round of furloughs that ended in June.
Last week, the California Supreme Court said furloughs of state workers could resume while it reviewed whether governors have the authority to mandate unpaid days off. The announcement Wednesday was a victory for Schwarzenegger, who has sought to save the state money by imposing another round of furloughs.
Schwarzenegger spokesman Aaron McLear said last week that furloughs for about 150,000 state workers were to begin Friday. He said the furloughs are estimated to save the state $150 million a month.
© 2016 Newsmax Finance. All rights reserved.