California Gov. Arnold Schwarzenegger has privately proposed counting savings from reducing public worker pensions toward helping erase a $19 billion budget deficit.
Mr. Schwarzenegger wants the $211.4 billion California Public Employees' Retirement System, Sacramento, to credit the state with $2 billion this year, according to a state official who was briefed on the proposal and isn't authorized to discuss it publicly.
He would count that as an advance on the roughly $74 billion he estimates in savings during the next 30 years from his proposals to roll back pension benefits for government workers.
California began its fiscal year on July 1 without a spending plan after Mr. Schwarzenegger and Democrats who lead the state Legislature remained deadlocked over how to fill the deficit. He has vowed not to sign any final budget unless it's accompanied by legislation to permanently cut the state's cost to finance retirement benefits for government workers.
The state must pay $3.9 billion this fiscal year to CalPERS to finance retiree costs, up from $145 million a decade earlier. In 1999, lawmakers and then-Gov. Gray Davis approved benefit increases that Mr. Schwarzenegger says the state can't afford and he wants them rolled back for new hires. He has supported proposals to require public employees to work longer to qualify for pensions and to pay more toward benefits.
CalPERS spokeswoman Pat Macht declined to comment. Pension plan employees have the day off because of unpaid furloughs ordered by the governor. Rachel Arrezola, a spokeswoman for Mr. Schwarzenegger, declined to comment.