Governor Moves To Withhold State Employees Wages

The controller has been ordered to pay state workers only the federally required minimum wage during the month of July to ease the state's cash flow until a budget is passed.

The Sacramento Bee reports the order issued Thursday by the Department of Personnel Administration would see most workers paid $7.25 an hour, although unions that have agreed to labor concessions would be exempt.

They would receive back pay for their full wages once a budget was in place.

California's budget is delayed this year by disputes over how to close a $19 billion deficit.

Gov. Arnold Schwarzenegger tried the same maneuver during last year's budget crisis, but the controller refused to comply citing possible violations of federal law and technical problems in implementing the change with the state's older computer system.

State finance officials estimate every day without a budget costs the state $52 million. Treasurer Bill Lockyer said more IOUs or delays on infrastructure projects were possible if there is no budget in place by July 31.

The governor cited a 2003 state Supreme Court decision allowing the pay maneuver affecting about 250,000 public employees.