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Schwarzenegger Backs Down On Pension Reform

Gov. Arnold Schwarzenegger Thursday morning pulled a proposed initiative that would have overhauled the public employee pension system. The Republican governor denied suggestions he had bowed to public pressure.

The plan to shift public pension to a 401(k)-style for workers hired after 2006 was part of a bigger reform package he presented in his State of the State address in January.

The proposal was roundly criticized by public employees ranging from teachers to state office workers who feared losing benefits they say are some of the biggest incentives for being on the public payroll. However, Schwarzenegger said he changed his mind after listening to the widows of law enforcement officers and others who worried the initiative would end death and disability payments to survivors.

“It´s always great when you listen to outside people, and when you listen to people that are very smart,” the governor told reporters.

“What´s important to me is what´s best for the state of California.”

It is a setback for the governor who had called lawmakers in to address the reforms he proposed and then started a petition drive when he thought they had not moved fast enough.

Democratic leaders praised the governor´s decision but want him to go a step further. “We also want to call him to sit down with us and let´s clear the air,” said Assembly Speaker Fabian Nunez, D-Los Angeles. “Let´s clear the cloud of tension.”