California Governor Arnold Schwarzenegger gave an order that some 200,000 state workers will be paid the minimum wage because no budget has been passed. The order given means most state employees will be receiving the federal minimum wage of $7.25 per hour starting July 01.

California is facing a $19bn deficit as the new fiscal year starts and the state legislature still needs to agree a budget. Two years ago, a similar wage order was made but it was not obeyed. However, once the budget is signed, workers will also get back the pay.

More than 30,000 state workers whose unions have recently agreed new pay and pensions deals with administration have been exempted from the wage cut. Highway California Patrol officers are included.

John Chiang, state controller who issues the paychecks to state employees has said that he will not obey the order. He had already refused in 2008, when Governor Schwarzenegger last ordered him to cut state workers’ wages.

Aaron McLear, Schwarzenegger’s spokesman, released a statement that the Republican governor has sent a message to the controller to follow the law. According to Schwarzenegger, the state has been badly affected by the global economic downturn and it has no choice but to face spending cuts.

Meanwhile, Republicans argue that increasing taxes would repress private sector job creation and slow any economic recovery. In California’s constitution, its budget requires to be approved by a two-thirds majority of lawmakers.