A statewide taxpayer group and the governor´s office have settled legal issues surrounding a lawsuit filed last summer aimed at stopping lawmakers from borrowing 2 billion dollars to pay pension obligations.
Instead, Gov. Arnold Schwarzenegger had proposed a 1 billion dollar bond measure to provide funding for retirement payments.
His plan still faces challenges, although a spokesman for the administration said the settlement with the Howard Jarvis Taxpayers Associations clears the way for the Schwarzenegger pension bonds.
Schwarzenegger wants to give new employees a far less generous retirement package than current union workers — something Democrats and unions oppose.
Last fall, a judge ruled in favor of the taxpayer group and blocked the state from issuing the 2 (b)billion dollars in bonds.