Greece’s fiscal peril should be warning sign for state 

Gov. Arnold Schwarzenegger pointed to the debt crisis in Greece as a wake-up call to California to reform the way it does business.

At a conference in Santa Clara, the governor weighed in on a report released Thursday by the Bay Area Council that said the biggest threat to the state’s economy is the lack of government reform.

“Greece is a warning for all of us, promising the people something you can’t deliver and spending more money than you have,” he said. “That’s the danger we run into in California with the public pension system, if we don’t reform the system.”

He said education spending suffers because of the state’s obligation to pay skyrocketing pensions. Education funding hinges on reforming pension plans statewide, he said.

The Bay Area still has strong economic assets — a skilled and educated work force and a remarkable amount of venture-capital dollars. But those things are starting to erode as the government’s “business-as-usual” practices weaken the state’s education system, budget structure and innovation capacity, according to the report.

“Pensions are crowding out education funding,” he said. “We hope the Legislature sees it the same way and will reform the pension systems so we don’t promise things we can’t keep because in the end the state is responsible for the shortfall of revenues.”

The comments by Schwarzenegger were made during a briefing by the Bay Area Council.


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