With no state budget in place as the new fiscal year approaches, California Governor Arnold Schwarzenegger has proposed a pay cut for state workers until the current standstill passes. Under the proposal, California workers would see their pay reduced to minimum-wage until a budget is passed, receiving full-back pay at that time. In defiance, State Controller John Chiang has vowed to ignore Schwarzenegger's order, so as not to break state and federal laws regarding overtime and retirement contributions. Both parties await a ruling by the 3rd District Court of Appeals, having presented their respective cases last week.
See "Gov. urges minimum wage for California state workers until budget deal is reached", Shane Goldmacher, Los Angeles Times, June 27, 2010