Schwarzenegger plans to slash state workers’ pay till budget passes

SACRAMENTO – Gov. Arnold Schwarzenegger is planning to cut the pay of about 200,000 state workers to the federal minimum wage of $6.55 an hour until a budget is signed, according to a draft of the governor’s order obtained by The Times.

Administration officials said Schwarzenegger is expected to sign the order early next week as part of an effort to avert a cash crisis. The controversial move, likely to be challenged in court by public-employee unions, would save the state about $1 billion a month, the officials said.

Workers would be repaid their lost earnings once a budget was in place.

The order also calls for the state to immediately lay off 19,000 part-time workers, stop overtime payments for almost all employees and cease all hiring until a budget is enacted. The deadline for passing a budget was July 1, and without one California may be unable to borrow billions of dollars needed to keep the state solvent.

“Because the Legislature has failed to pass a budget and our state does not have a rainy-day fund, this is one of a number of options we are considering to make sure we have sufficient cash to cover our costs,” said administration spokesman Matt David.