ANGELIDES PROPOSES PENSIONS AID STATE USE MONEY TO PAY FOR BRIDGES, FREEWAYS, STATE TREASURER SAYS.

Byline: HARRISON SHEPPARD Sacramento Bureau

SACRAMENTO - California's two largest pension funds should invest $15 billion in urban infrastructure to provide a reliable funding source as the state looks to improve its bridges and freeways, State Treasurer Phil Angelides proposed Monday.

Angelides, who sits on the board of the California Public Employees Retirement System and the State Teachers Retirement System, proposed that those two pension funds invest up to 5 percent of their assets in projects that generate income from bridge tolls and other user fees.

``Our state has a very substantial need for investments in infrastructure that can support a growing economy,'' Angelides said.The pension funds would be a better source of capital than the foreign companies which have becoming increasingly involved in infrastructure investments, he argued.

His proposal comes as Gov. Arnold Schwarzenegger and the Legislature consider plans for a series of infrastructure bonds to put before voters.

Schwarzenegger earlier this year proposed $68 billion in bond financing, though Democrats had wanted a smaller amount.

Negotiators failed to make the deadline for the June ballot but are still considering putting a bond forward in November.

Assembly Speaker Fabian Nunez, D-Los Angeles, and Senate President pro tem Don Perata, D-Oakland, support Angelides' proposal, which is seen as an addition to, not a replacement for, the governor's plan.

A spokesman for the state Finance Department said the governor still hopes to reach a bipartisan agreement on a bond package but will review Angelides' plan.

``The deadline for June may have passed, but the needs are clearly still there,'' spokesman H.D. Palmer said. ``The fact that Republicans and Democrats are continuing to discuss this issue we think is a good sign.''

The proposal would have to be approved by the boards of PERS and STRS, but not the Legislature.

Schwarzenegger appoints two of the 13 board members of PERS and five of 12 members on STRS.

State Controller Steve Westly, who also sits on the PERS and STRS boards and is running against Angelides for the Democratic nomination for governor, declined comment.

harrison.sheppard(at)dailynews.com

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