US: Arnie Lines Up California Staff to Take Pay Hit

Arnold Schwarzenegger, California's governor, has threatened to cut the pay of hundreds of thousands of public employees to below the state minimum wage in an attempt to balance the budget of the world's seventh largest economy.

A substantial drop in earnings is on the cards today for 200,000 California employees should Schwarzenegger deliver on his threat to cut their wages to the federal minimum of just over $6 (£3) an hour.

The move was made last week by the governor ahead of a budget impasse that has seen California's leaders unable to agree on a formula to resolve the state's chronic $15bn (£7.5bn) deficit.

In a draft executive order leaked last week Schwarzenegger instructed the administration to pay non-essential state workers the federal minimum wage - which is below California's minimum pay - to clamp down on hiring and overtime, and to fire 21,000 part-time employees. The governor is due to sign the order today.

His ploy to help resolve California's annual budget impasse brought an immediate response. The following day state employees held a protest outside the state's seat of government in Sacramento. Speakers denounced Schwarzenegger and fellow legislators for their intention to make some of its lowliest employees shoulder the burden.

Schwarzenegger was repeating tactics he has used most years since being elected governor in a recall vote in 2003. California rarely agrees a budget by the July 1 deadline. In the past, Schwarzenegger has tried to shame legislators into compromise, to ridicule them - hence the infamous "girlie-men" remark - or outmanoeuvre them by going directly to the voters.

The tactics, however, have not always proved successful. And as he repeats the trick every year, there are growing complaints that he is playing games instead of performing the hard work of negotiation. Instead of uniting legislators across the aisles behind his political project, he has managed to unite Democrats and Republicans against him.

"He uses gimmicks," said Democratic strategist Bob Mulholland. "The one thing Schwarzenegger can't do is get votes from the Republicans. He is not up to the job."

Put simply, the state faces two ways of resolving the budget impasse: by raising taxes or cutting spending. And while Schwarzenegger has hovered between the two, disillusion with his governing style among legislators in his own party means he has been unable to persuade them to help him fashion a solution.