Politics

SACRAMENTO (CBS 5 / AP) ― California Gov. Arnold Schwarzenegger on Monday temporarily backed off his threat to eliminate about 22,000 temporary, part-time and contract workers and impose a hiring freeze because of the state budget impasse.

As more than 100 union workers picketed outside the state Capitol, the governor opted not to sign an order to implement the cuts immediately. Instead, he's hoping legislative leaders are making progress on the overdue state budget, which has a $15.2 billion shortfall.

Schwarzenegger spokesman Aaron McLear said the governor would sign the order Thursday if no state budget is in place by then.

"Thursday marks the first day of the state pay period, and Governor Schwarzenegger will use his executive authority on Thursday to prevent a cash crisis," McLear said.

The order also would stop most overtime and allow him to roll back salaries for nearly 200,000 state workers to the federal minimum wage of $6.55 an hour. The workers' full pay would be reinstated once a state budget is approved.

Schwarzenegger issued the threat last week after he grew frustrated with lawmakers' inability to reach a budget deal for the fiscal year that started July 1. He wants one in place by Friday, the first of August.

Schwarzenegger spokesman Aaron McLear said the governor would sign the order Thursday if no state budget is in place by then.

"Thursday marks the first day of the state pay period, and Governor Schwarzenegger will use his executive authority on Thursday to prevent a cash crisis," McLear said.

Democrats want to close California's $15.2 billion deficit for this fiscal year through a combination of spending cuts and tax increases. They want to raise $8.2 billion by boosting taxes on the wealthiest Californians and corporations, and say another $1.5 billion can come to the state through an amnesty on tax scofflaws.

Republicans oppose any new taxes but have yet to offer their own budget proposal, said Assembly Budget Committee Chairman John Laird, D-Santa Cruz.

"It's time for the legislative Republicans to tell the public how they would balance the budget," he said.

Senate Minority Leader Sen. Dave Cogdill, R-Modesto, did not immediately respond to a telephone message.

Administration officials have said that if a budget is not in place by the start of August, they will have to start negotiating costly loans to bridge the gap.

Senate President Pro Tem Don Perata, D-Oakland, canceled a vote scheduled for Tuesday on the Democratic budget plan, saying it would disrupt the progress legislative leaders are making in their negotiations.

"I know the state is facing a cash crunch, and I am doing everything possible to pass a budget that fixes the state's fiscal problems, which every year get worse," he said in a statement.

The legislative leaders had no meetings scheduled Monday, however.

Outside the Capitol, workers in purple shirts reading "Value Me" chanted for a budget deal.

They were members of the Service Employees International Union Local 1000, which represents nearly half the 200,000 workers who would be affected by the governor's executive order.

The union set up 121 cots—with a name tag for each legislator and the governor. Union president Yvonne Walker said lawmakers should be forced to stay in the building until they reach a compromise on the spending plan.

Schwarzenegger has himself mused that he would like to hold the four legislative leaders captive to force them to work out a deal.

Even if Schwarzenegger signs the order Thursday, it's not clear that most state employees would see their wages rolled back.

Controller John Chiang, who issues employees' checks, has said he will not comply, and the union is likely to seek an injunction stopping the action.

It would take effect for checks issued at the end of August.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)