Reporting from Sacramento — More than 200,000 state employees will receive their full wages in July and August after a state judge on Friday denied an injunction sought by Gov. Arnold Schwarzenegger to cut their pay.
The Schwarzenegger administration had asked the court to order that the employees' pay immediately be reduced to the federal minimum wage of $7.25 an hour because there is no state budget in place.
The governor has maintained, and two courts have agreed, that state law requires the reductions as California enters the third week of the fiscal year without a spending plan. But state Controller John Chiang, who prints the paychecks, has insisted that he cannot implement the order because of the state's outdated computer system.
Judge Patrick Marlette of Sacramento County Superior Court said that although Chiang was breaking state law by failing to issue the smaller paychecks, he could not discount the computer argument as "frivolous."
"We're very pleased," said Hallye Jordan, a spokeswoman for Chiang.
But the legal wrangling is not over. Marlette said he would set a full hearing for late August to explore whether Chiang's computers can compute the pay cut that Schwarzenegger ordered.
More than a dozen unionized state workers celebrated the ruling on the courthouse steps.
"This is great," said Franco Rozic, 44, of Roseville, a Department of Education analyst. "It means I don't have to worry about losing my apartment."
Democrats in the Legislature also cheered the decision. Senate President Pro Tem Darrell Steinberg (D- Sacramento) called the governor's attempt to impose the minimum wage "nothing more than a ploy to gain leverage in budget negotiations."
Workers would be repaid back wages once a budget is signed.
"We are confident we will continue to win on the merits of this case," said Lynelle Jolley, a spokeswoman for the Department of Personnel Administration, the plaintiff in the case.
She urged the Legislature to pass a budget "so we don't have to pay our employees minimum wage."
The fiscal year began July 1. Budget talks remain in the preliminary stages.
Times staff writer Jack Dolan contributed to this report.