SACRAMENTO, Calif. (AP) — Opponents of a bill that would create the nation's first state-run retirement program for private-sector workers testified Wednesday that California taxpayers cannot afford to take on the potential for billions of dollars in new liabilities at a time when the state's public pension systems already are facing massive shortfalls.

Businesses, insurance companies and financial services firms criticized SB1234 by Democratic Sen. Kevin De Leon of Los Angeles. His bill would establish the California Secure Choice Retirement Savings Program for nearly 7 million low-income workers whose private employers don't offer retirement plans.

The bill's fate was uncertain after it was held by the Assembly Appropriations Committee. It had earlier passed the Senate, where it had the backing of the Senate leader, President Pro Tem Darrell Steinberg, D-Sacramento.

"We all know that markets are volatile, and if the projections that are associated with the investment returns of this program come up short, then the state or the employer will be on the hook for the shortfall," said Nicole Rice, representing the California Manufacturers and Technology Association. "I don't think it's a stretch of the imagination to acknowledge this fact given that we currently have an outstanding pension debt that we owe to public employees at the tune of billions of dollars."

The California Public Employees' Retirement System posted a 1 percent return on its investments last fiscal year, well below its long-term annual target of 7.5 percent. The current long-term unfunded liability for CalPERS is estimated at about $85 billion, and the California State Teachers' Retirement System is short by about $64.5 billion.

Rice added that California also faces billions of dollars in projected budget shortfalls.

De Leon introduced the bill earlier this year in response to what he called the "looming retirement tsunami" as millions of low-wage workers face financial hardship in their retirement years. He says the program would act as a supplement to Social Security by offering private-sector workers a portable savings plan with a guaranteed return.

"SB1234 is not a traditional pension," De Leon said. "It is not a defined benefit plan as we know today where you combine experience or years of service, the employee contribution along with the employer match."

De Leon's bill would require employers to withhold 3 percent of their workers' pay. The program would be administered by a seven-member board chaired by the state treasurer.

The Securities Industry and Financial Markets Association and other opponents say workers whose employers don't offer 401(k) accounts already can establish low-cost private retirement accounts, such as traditional IRAs, Roth IRAs and other savings plans.

The bill passed the Senate in May and needs approval from the Assembly before heading to Gov. Jerry Brown, who has not taken a position.

Assemblyman Jim Nielsen, R-Gerber, cautioned small business owners not to compromise quickly. "This could be a very serious mistake for you," Nielsen said.

De Leon said California taxpayers are protected and the program won't proceed unless an initial market analysis determines the program is feasible. He said the state won't be at risk because the program will be protected by insurance underwriters if earnings fall short of the retirement benefits guaranteed to workers.

Brown's finance advisers aren't so sure. An analysis by the governor's Finance Department raised concerns about the high cost of administering the program and the risk to taxpayers if investments fail to meet the benefits promised to workers.

Even if the state sponsors the plan, opponents say the businesses that employ participating workers could be held financially responsible. That's because all private-sector defined benefit plans have to meet minimum standards under the federal Employee Retirement Income Security Act, or ERISA.

If the federal law applied to the program, which opponents believe it does, employers could be expected to pay some or all of any unfunded liabilities should investment returns fail to cover the guaranteed rate of return and administrative overhead. De Leon acknowledged that regulatory and tax hurdles remain.