Report to work today, state employees.

A California appellate court sent that message Thursday by refusing to lift a judge's order blocking imposition of furloughs – at least for now.

While ending days of confusion over whether state offices would be closed today, the ruling does little to resolve fighting over Gov. Arnold Schwarzenegger's push to cut costs by furloughing more than 144,000 employees.

For workers caught in the middle, the legal tug-of-war raises both fiscal and family issues, such as the size of their next paycheck and when their kids will need child care.

"Everybody is elated that their pay is not going to be cut (this week)," said attorney Pat Whalen, representing state attorneys, hearing officers and administrative law judges.

Schwarzenegger, through a spokesman, vowed to file an appeal today with the California Supreme Court that, if successful, could allow furloughs to begin next Friday.

Aaron McLear, Schwarzenegger's spokesman, said the state needs to cut costs quickly in tackling a $19 billion deficit.

"The furloughs are a direct result of the Legislature's failure to pass a budget, which is causing the state to run out of cash and face IOUs this month," McLear said.

"Whether through more furloughs, pay cuts, or layoffs, we will realize the intended savings to state employee compensation and cut back just as every California family and business is doing," McLear said.

Since furloughs cannot begin today, McLear said an extra furlough day is likely to be added in coming weeks to compensate for the millions in budget savings that would have occurred.

"Uncertainty still lingers over public servants, but this is good news today," Bruce Blanning, of Professional Engineers in California Government, said of Thursday's appellate action.

The 1st District Court of Appeal's two-sentence ruling did not elaborate on its reasons for sustaining a lower court order.

The fight can be traced to July 28, when Schwarzenegger ordered workers to take unpaid days off on the second, third and fourth Fridays of each month.

The temporary pay cut of roughly 15 percent, until a state budget is passed, is similar to a program imposed by Schwarzenegger last year.

The furlough order applied to many, but not all, state workers – legislative aides, for example, are not under gubernatorial control.

Schwarzenegger also expressly excluded tens of thousands of employees based on where they work or their unions' labor contract status.

Employees of the State Board of Equalization, Franchise Tax Board, Employment Development Department, State Compensation Insurance Fund, California Housing Finance Authority and California Earthquake Authority were among those excluded.

Schwarzenegger's order exempted about 37,000 workers in six unions, including those representing Highway Patrol officers and state firefighters, that recently struck tentative labor agreements with the governor's administration.

The Republican governor initially targeted about 156,000 workers to save about $147.2 million per month, including about $80 million for the general fund. Constitutional officers are expected to balk, however, reducing affected workers to about 144,000.

State worker unions filed suit against the order, prompting Alameda Superior Court Judge Steven A. Brick to issue a temporary restraining order Monday blocking furloughs pending a Sept. 13 court hearing for both sides to press their case.

Brick ruled that "serious questions" have been raised about the legality of furloughs and that permitting them before next month's court hearing could cause irreparable harm to workers struggling to pay mortgages and care for families.

Schwarzenegger immediately appealed Brick's ruling to the appellate court in an attempt to avoid even a one-month delay in imposing furloughs.

The governor argued that furloughs are essential to save key health and safety programs during the budget crisis.

Schwarzenegger's appeal said the lower court overstepped its bounds by "questioning the wisdom, rather than the lawfulness" of gubernatorial policy decisions.

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Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538.

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