Judge denies Schwarzenegger bid to compel pay cuts

SACRAMENTO, California (Reuters) - A California judge on Friday denied Governor Arnold Schwarzenegger’s attempt to force State Controller John Chiang to process pay cuts to the federal minimum wage for some 200,000 state employees.

Schwarzenegger earlier this month ordered the pay cuts amid a stalemate in talks for balancing the state budget, which requires closing a $19 billion shortfall. Chiang balked at implementing the order, saying it raised legal problems and the state’s payroll system could not accomplish it. Schwarzenegger then sought a court order to compel Chiang to honor the order.

The judge hearing their dispute, however, said the case could proceed to address merits for and against Schwarzenegger’s order and that he wants it completed by the end of August.

Reporting by Marianne Russ in Sacramento; Writing by Jim Christie, Editing by Chizu Nomiyama