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No pay cut for California workers - for now

By Julianne Pepitone, staff reporter

NEW YORK (CNNMoney.com) -- A judge on Friday ruled against California Gov. Arnold Schwarzenegger's request to force the state controller to cut 200,000 state employees' pay to minimum wage temporarily.

The ruling was a boost for State Controller John Chiang, who for weeks has refused to carry out the cuts.

But the fight isn't over yet. Sacramento County Superior Court Judge Patrick Marlette scheduled another court session for July 26, a spokeswoman for Chiang's office said.

Schwarzenegger moved in July to cut 200,000 state workers' wages to $7.25 an hour starting Aug. 1. But Chiang said he would not make the cuts and would wait until he completed an appeal of another court's ruling on a similar pay cut order from 2008.

Schwarzenegger's office sued Chiang last week in an effort to force him to make the cuts, but Chiang promptly filed a cross-complaint alleging that the order violates federal and state law.

The judge said he ruled for Chiang "because the issue of cutting workers' pay needed more consideration and the controller shouldn't be forced to make the cuts immediately," according to Chiang's spokeswoman.

In his refusals, Chiang has also said the payroll computers aren't equipped to make the cuts, but the court declined to rule on that subject. Chiang's spokeswoman said Marlette wants that issue to be resolved before the end of August.

"We are confident we will continue to win on the merits of this case, as we already have done twice," Schwarzenegger's spokeswoman said in a statement. "We hope the legislature passes a budget by then so we don't have to pay our employees minimum wage."

Marlette's office did not have comment late Friday.

California budget stalemate: The move to cut paychecks stems from a larger fight over how to close a $19.1 billion budget shortfall. California's fiscal year began July 1, and Schwarzenegger and the legislature have yet to agree on a budget.

State workers have gotten caught in the crossfire. Schwarzenegger's proposed salary reductions would cut across all job types and pay scales, though affected workers would receive back pay when the budget is passed.

Republicans want severe cuts to state social services such as welfare and Medicare, instead of hiking taxes. But Democrats oppose the program cuts and instead want tax increases on industries such as oil production. To top of page

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