Posted on 08/20/2010 8:01:08 AM PDT by SmithL
Gov. Arnold Schwarzenegger has privately proposed borrowing $2 billion from the state's giant pension fund to help bridge California's $19 billion budget deficit.
The plan would take the money as an advance against future savings from pension cuts, according to sources close to the negotiations who would not be identified because of the sensitive nature of the talks.
The Republican governor is demanding that lawmakers reduce pension benefits for newly hired state workers back to pre-1999 levels as part of any budget agreement he signs. The Legislature and Gov. Gray Davis that year authorized larger pension benefits under the assumption that investments would perform better than they have.
Reducing pension benefits to pre-1999 levels for new employees would save the state $93 billion over 30 years in payments to the California Public Employees' Retirement System, Schwarzenegger's office projects.
But the state would not save much in the current budget year. Under the governor's borrowing idea, the state would seek $2 billion upfront from CalPERS, backed by 30 subsequent years' worth of savings, sources said. The governor floated the idea earlier this month.
(Excerpt) Read more at sacbee.com ...
This idea is brilliant! I love it! California can create a lock box and move all the CalPERS money into it, spend the money and leave a bunch of worthless bonds or IOUs in the lock box. It would work out just as well as the Social Security lock box!
Actually I’m surprised that they have not gone after this money before now. We are talking a huge amount of money, politicians just can’t resist that kind of temptation so sooner of later it will be tapped into. Either that of the Feds will grab it sometime in the future for exactly the same reason (along with our 401K and IRA accounts).
Just remember that when the Ponzi scheme that is the California budget finally collapses, they will come screaming to the Feds (ie, us taxpayers from other states) to bail them out and sadly, they may have enough clout to get it.
I have no doubt that they will, but they had better do it before the November elections. After November I think that the Repubs will have enough votes to block any bail out. But like I said, they will eventually raid all retirement accounts and everyone will be equally screwed.
Govenment has raided social security and medicare and now they want to raid retirement accounts?....The beginning of the end for us all.
Politicans are alwyas looking for gimmicks as a quick fix to deep systemic problems. And not just in Califoria. The same people who get us into a mess then want to convince us they can get us out of it. Too often they succeed in worsening the original problem.
It’s a no-brainer. Jerry Brown is the AG who refused to support Prop. 8 in federal court and told 53% of Californians to FO.
Whitman may be a RINO but so far she hasn’t told me to FO.
Same-o same-o, across the country.
First the “people’s representatives” give over ownership of the lid on the cookie jar of public employee compensation to the employees and their unions, and then after allowing the laws to mandate overly generous pensions, you either fail to fund them or rob their funds, increasing the financial responsibility of future taxpayers; robbing from our children and grandchildren.
Providing overly generous benefits to public employees is outrageous. Stealing the funds for them after the fact is no better.
Well Said!
I’m still shaking my head.
They’re criminals, IMO.
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