By Dan Walters
dwalters@sacbee.com The Sacramento Bee
Published: Tuesday, Aug. 31, 2010 – 12:00 am | Page 3A

Arnold Schwarzenegger has been beating the drums for public pension reform for months, and the governor insists he won’t sign a budget package that doesn’t include it.

Schwarzenegger argues that a major boost in state worker pensions 11 years ago – largely adopted by local governments as well – and sharp declines in retirement fund earnings have created massive unfunded liabilities that will gobble up an ever-increasing share of revenue.

If not fixed, he says, the pension deficits will eviscerate schools, health and welfare services, police and fire protection, and other claimants on the public purse.

The numbers support the contention. A recent study by the city of Los Angeles, for instance, found that pensions for police and fire retirees, 8 percent of the city’s general fund budget in 2009, will rise to 20 percent by 2015. It said total pension costs will consume a third of the budget by then.

The city’s top administrator, Miguel Santana, channeled Schwarzenegger when he told the City Council, “For every dollar you’re paying into your pension systems, you’re not paying into libraries, parks and various other city services.”

Specifically, Schwarzenegger wants the Legislature to roll back the big pension sweeteners enacted by the Legislature and then-Gov. Gray Davis in 1999 and limit new state workers to pre-1999 benefits.

The governor has negotiated a few contracts with state employee unions that change pensions, but the Legislature, whose majority Democrats are tightly entwined with unions, almost certainly will not do the massive rollback that Schwarzenegger demands.

So, one might wonder, what would Schwarzenegger accept as sufficient pension reform so that he could sign a budget?

The governor may have to settle for a few incremental pension reforms pending in the final hours of the legislative session, particularly Assembly Bill 1987, whose tortured history illustrates the political difficulty of the issue.

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