Already burdened with its worst unemployment in 12 years, the Sacramento area figures to suffer even more following Gov. Arnold Schwarzenegger's decision Thursday to lay off 10,300 temporary and part-time employees and cut most full-time workers' salaries to minimum wage.

Though the cutbacks are expected to be temporary, the news sent a chill through a metro area that has one of the worst foreclosure rates in the country.

The salary reductions alone, which will take tens of thousands of Sacramentans down to $6.55 an hour, could take roughly $15 million out of the region's economy each workday until the budget impasse is resolved, according to an estimate by the Service Employees International Union.

Minimum wage would take effect at the end of August for most of the 200,000 state workers. On an annual basis, it would take the average state worker's pay from more than $50,000 to about $13,600.

"It's certainly a large shock to a regional economy," said Jeff Michael, director of business forecasting at the University of the Pacific. "This isn't the news the Sacramento regional economy needed to hear. It has struggled the last six months or so to create jobs."

With the real estate market just starting to get healthy, John Arvanitis, president of Sunrise Vista Mortgage Corp. in Citrus Heights, said lenders may think twice about approving a mortgage for a state worker affected by the governor's order.

"If you're an underwriter and you see someone who's listed as one of those casualties who's gotten laid off or had their salary reduced indefinitely, that's going to be significant," Arvanitis said.

It's not clear whether the pay cuts will take place at all. State Controller John Chiang repeated his pledge to defy Schwarzenegger's executive order; the governor said he'll sue the controller if necessary. But nobody was disputing Schwarzenegger's authority to lay off some 10,300 temporary and part-time workers. It wasn't clear how many of those employees work in the Sacramento area.

Some agencies began letting part-timers go in advance of the order. One of the victims was Patsy Owen, a clerical worker at the Department of Corrections in Rancho Cordova.

"I need the income," said Owen, 65, who lives in Roseville with her daughter and four grandchildren. "Losing my job took my finances from bad to big-time bad, with food and gas costing so much these days." She's already had to cut out the kids' swim lessons.

The Sacramento region is home to about 112,000 state employees, including education workers. They make up about 11 percent of the area's work force and represent a stabilizing force in the economy. But in June state employment fell by 1,900 workers in Sacramento, mainly due to attrition. That helped drive the area's unemployment to 6.8 percent.

Area credit unions are offering no-interest loans to help bridge the gap, but the type of loan and eligibility depends on the employees' relationship with the credit union.

State workers who aren't in a credit union might have a tough time getting cash, Michael said.

"We're in a credit crunch," the University of the Pacific economist said. "The ability of workers to smooth this out is going to be affected."

The budget crisis also means private vendors that do business with the state are having to wait to get paid. An estimated $1.25 billion in payments was withheld statewide in July, and an additional $3 billion in payments for August is in danger of being delayed.

Call The Bee's Dale Kasler, (916) 321-1066. The Bee's Jon Ortiz contributed to this report.