Thursday, July 24, 2008


Gov. Arnold Schwarzenegger, at the state Capitol, "is looking into many different options to preserve cash to ensure we have enough to cover our costs," an aide said. Unless the Legislature passes a budget, the governor believes the state could run out of money by mid-September because of a soft economy and low reserves, officials said.
Gov. Arnold Schwarzenegger plans to sign an executive order next week intended to temporarily reduce pay for 200,000 state workers to the federal minimum wage of $6.55 per hour to preserve cash until lawmakers reach a budget deal, according to a draft copy of the order obtained by The Bee.

The governor's order also would terminate about 22,000 retired annuitants, temporary workers and seasonal employees, as well as impose a hard freeze that blocks the hiring of roughly 1,700 new employees per month.

Administration officials said the Republican governor expects to take the action Monday, when the budget will be four weeks late as Democrats and Republicans continue to spar over how to resolve a $15.2 billion shortfall.

"The administration is looking into many different options to preserve cash to ensure we have enough to cover our costs," said Matt David, Schwarzenegger's communications director.

But a spokeswoman for Democratic state Controller John Chiang, who pays the state's bills, said he would ignore the governor's order and continue paying full salary, likely forcing a court battle.

"He will pay state workers the salaries that they have earned, and that's full salary," Deputy Controller Hallye Jordan said of Chiang.

The order would take effect for the August pay period and envisions that state workers would receive their back pay in full when a budget is signed. State workers who get paid once at the end of the month still will receive their July paychecks next week.

The move would save roughly $1 billion in cash per month, depending on how many employees are exempt under federal law because they work in health and safety fields, according to Schwarzenegger officials. Each state department head will be responsible for determining which employees are exempt under federal law

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