ARNOLD: REFORM GOALS ALIVE DEMOCRATS SCOFF AT CPR FOR PENSION PLAN.

Byline: Harrison Sheppard Sacramento Bureau

SACRAMENTO - Even as he pushes a massive infrastructure bond plan, Gov. Arnold Schwarzenegger said Tuesday he will continue fighting for some of the reforms he proposed last year, including revamping the state's pension system.

Schwarzenegger said he will appoint a committee to study reforms to the pension system, which has a massive unfunded liability.

``We need the reforms on all of the issues that we fought for last year,'' Schwarzenegger said during his annual appearance before the Sacramento Press Club. ``Those things didn't go away.''

Schwarzenegger included pension reform as part of the government overhaul effort introduced last year, but it was dropped after firefighters and police officers complained the proposal would eliminate death and disability benefits.

He had proposed changing the retirement system to a defined contribution plan, similar to corporate 401(k) plans. Under the current defined benefit system, participants contribute a fixed amount and receive a fixed amount when they retire.

Democrats and other unions had also resisted his pension reform efforts, but Schwarzenegger said he hopes to craft a package upon which both parties can agree.

Assemblyman John Laird, D-Santa Cruz, chairman of the Assembly Budget Committee, expressed skepticism that the governor was serious.

``I think it's a really low probability they'll come back,'' Laird said.

``To go from a place where he said, 'This (is) a priority; I'm putting it on the ballot; circulate signatures,' and a year later say, 'I'm forming a committee,' I think that's a face-saving way of pretty much walking away from the situation.''

Schwarzenegger also disputed accusations that his practice of having his staff members serve on his re-election campaign is a conflict of interest. Some critics have argued that campaign contributors are, in essence, paying the campaign salaries of the same staffers who are evaluating policy issues that may affect those contributors.

Schwarzenegger said he and his wife, Maria Shriver, personally contribute substantial funds to his campaign, so he believes he is personally paying the salary of those staffers on the campaign payroll.

He also said conservatives who are upset with his recent moves to the political middle, including hiring a Democrat as his chief of staff, shouldn't be surprised because he has worked with Democrats his whole life. He said he surrounds himself with people he considers best for the job, regardless of their party affiliation, and noted that before he took office, a majority of the people working for him were Democrats, while his wife comes from a well- known Democratic family, the Kennedys.

He reiterated his position against signing a bill to grant driver's licenses to illegal immigrants until the issue is fully resolved at the federal level.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com