A San Francisco Superior Court judge ruled Wednesday that the Schwarzenegger administration acted legally when it enforced a new law that eliminated two former state holidays – including Lincoln's Birthday next week.

The state attorneys' union had sued the governor's Department of Personnel Administration for carrying out a law passed nearly a year ago eliminating Lincoln's Birthday, Feb. 12, and Columbus Day, the second Monday in October, as paid holidays for state employees.

The change cut the number of paid state holidays from 14 to 12.

"We agree with today's ruling," said Schwarzenegger spokeswoman Rachel Arrezola. "It doesn't make sense for state employee unions to fight to go from 12 holidays to 14 in today's economy, when the rest of state government and the private sector is cutting back."

CASE – California Administrative Law Judges, and Hearing Officers in State Employment – filed an administrative grievance in August on behalf of its 3,700 members, claiming the law violated their contract, even though its pact has expired. CASE and nearly all of the unions representing more than 200,000 state workers have been working under the terms of expired contracts since mid-2008 or longer.

Still, the attorneys' union said, eliminating the holidays violated the terms of its contract because terms of expired pacts remain in force until a new deal is in place.

That contract principle is key for the unions, because they view it as a counterweight to their inability to strike legally. It's also looming large as they prepare to re-enter labor talks with Schwarzenegger, whose latest budget proposal assumes cuts in state workers' pay of 5 percent to 10 percent and increases in what employees pay into their retirement funds.

CASE attorney Patrick Whalen said Wednesday afternoon the ruling doesn't invalidate the evergreen clause for pay or pension issues.

After its grievance went nowhere, the union sued the administration for instructing state departments to treat the holidays as regular workdays, "despite the fact that both days are specifically designated as holidays" in the union's contract, according to the complaint it filed with the court.

Busch disagreed on Wednesday and ruled that the expired contract's evergreen clause doesn't prevail.

Busch's decision "boiled down to saying … the (contract) does not provide a vested right and the Legislature can change it," state personnel department spokeswoman Lynelle Jolley said in an e-mail to The Bee.

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Call Jon Ortiz, Bee Capitol Bureau, (916) 321-1043.

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