Schwarzenegger orders minimum wage for workers

(07-02) 04:00 PDT Sacramento - --

Gov. Arnold Schwarzenegger has ordered the state controller to cut the pay for most state workers to the federal minimum wage of $7.25 per hour due to the lack of a budget being in place by the start of the fiscal year, which began Thursday.

The governor was expected to make that order, which affects about 200,000 state workers, though the timing was uncertain.

State workers who experience pay cuts would be reimbursed once a state budget is in place. Most state employees are paid monthly at the end of the month, so if a budget is in place before the end of July, they would not receive a reduced paycheck.

Administration officials maintain they are required by law to reduce worker pay in the absence of a budget.

In a letter to Controller John Chiang, Debbie Endsley, the director of the Department of Personnel Administration wrote, "Today is July 1, 2010, and there is no state budget. Regrettably, we must take the steps ... to adjust wages and salaries during this budget impasse."

The administration made a similar order in 2008, but Schwarzenegger waited until the end of July to do so. Chiang defied that order and was sued by Schwarzenegger, but the budget impasse was resolved before a judge made a ruling in favor of the governor.

Chiang appealed the judge's decision and oral arguments were heard last week. A subsequent decision could still be appealed to the state Supreme Court. The administration has argued that it is bound by law to slash pay to the federal minimum wage without a spending plan in place, while Chiang has countered that doing so is actually a violation of the law.

In response to the administration's actions Thursday, Chiang released a statement saying he would not comply with the request until the courts make a final ruling and calling Schwarzenegger's order "political tricks."

"Because of the limits of the state's payroll system, there is no way that his order can be accomplished without violating the state Constitution and the federal Fair Labor Standards Act," Chiang said in a statement. "In short, his demands will do nothing to solve the budget deficit, but will hurt taxpayers by exposing the state to billions of dollars in penalties for those violations."

Six public employee unions that represent about 37,000 workers would be excluded because they have agreed to contract concessions that gave them an exemption from such an order. However, those contracts have yet to be approved by the union membership or the Legislature.

In her letter, Endsley wrote, "We anticipate passage of a continuous appropriation (from the Legislature) for these bargaining units before the end of the month."

Assembly Speaker John Pérez, D-Los Angeles, said he was "deeply disappointed" by Schwarzenegger's order.

"This is not a realistic proposal to save the state cash any more than his budget plan, which kills 430,000 jobs, is a realistic proposal to close our deficit," he said in a released statement. "Using working families as leverage is not the kind of leadership we need to get through this budget process."

The state's largest public employee union, SEIU Local 1000, along with the union representing prison guards, have yet to reach agreement on contracts. An SEIU spokesman could not be reached for comment.

E-mail Wyatt Buchanan at wbuchanan@sfchronicle.com.

This article appeared on page C - 1 of the San Francisco Chronicle