Governor sues controller to force pay cuts SACRAMENTO He wants a judge to force Chiang to implement order

California Governor Arnold Schwarzenegger talks to reporters before signing an executive order eliminating 22,000 part-time and temporary positions and ordered that up to 200,000 state workers receive the federal minimum wage during a news conference at the Capitol in Sacramento, Calif., on Thursday, July 31, 2008. (AP Photo/Steve Yeater) less California Governor Arnold Schwarzenegger talks to reporters before signing an executive order eliminating 22,000 part-time and temporary positions and ordered that up to 200,000 state workers receive the ... more Photo: Steve Yeater, AP Photo: Steve Yeater, AP Image 1 of / 4 Caption Close Governor sues controller to force pay cuts 1 / 4 Back to Gallery

Gov. Arnold Schwarzenegger sued state Controller John Chiang on Monday after he refused to follow the governor's order to slash pay for thousands of state workers to federal minimum wage as a cash-saving measure during the budget impasse.

The governor's suit asks a judge to force the controller to impose the pay cuts until a budget is enacted, because Schwarzenegger's administration cannot wait for Chiang to comply with the governor's recent order, Lynelle Jolley, a spokeswoman for the Department of Personnel Administration, said.

But Chiang on Monday criticized Schwarzenegger's lawsuit as a misguided attempt to make the controller do something that is not feasible in such a short amount of time.

"Rather than focus on building consensus for a budget that addresses California's long-term fiscal problems, the governor seems adamant on picking a fight over whether state employees are entitled to the wages they have worked for and earned," Chiang said in a written statement.

Schwarzenegger on July 31 ordered pay cuts for thousands of state workers to $6.55 an hour, ordered the layoffs of more than 10,000 employees, eliminated overtime and imposed a hiring freeze.

The measures are required to help stave off a looming cash shortage in the absence of a budget that was due when California began a new fiscal year on July 1, Schwarzenegger said.

But the Republican governor's controversial order has run into legal, political and administrative challenges.

Service Employees International Union Local 1000, the largest state worker's union with about 94,000 members, has filed two lawsuits against the governor in Sacramento Superior Court and filed a third complaint with the state Public Employment Relations Board.

Clark Kelso, the court-appointed federal receiver responsible for fixing the state prison's health care system, surprised the Schwarzenegger administration by saying he is exempting most of the employees in state prisons from the governor's pay cut order.

Chiang, a Democrat, declared his defiance of the governor immediately after some newspapers, including The Chronicle, reported Schwarzenegger was about to issue an executive order aiming to slash state worker's pay.

The dispute between the controller and the governor is a replay of 2003, under then-Gov. Gray Davis, when the state Supreme Court issued a precedent-setting ruling that left some questions unanswered.

The court unanimously decided state workers who are paid by the hour and don't work overtime are entitled only to the federal minimum wage if the state begins a new fiscal year without a budget.

However, the Supreme Court didn't resolve the argument raised by then-controller Steve Westly that the controller has the authority to continue paying all state employees in full even without a budget because it would be too difficult to temporarily reduce their wages.

Chiang's office, which has been reiterating that argument, emphasized that point again on Monday in a letter to the administration, saying that changing the state's payroll system is not something to be taken lightly.

"If they are not performed thoughtfully and accurately, the system changes could subject the state to further litigation and unnecessary costs," Don Scheppmann, Chiang's chief of personnel and payroll services division wrote.