State workers' pay can be cut to the federal minimum wage when lawmakers miss California's annual budget deadline, a Sacramento Superior Court judge has tentatively ruled.

Assuming the ruling stands, it's a win for Gov. Arnold Schwarzenegger in a fight that started last summer when Controller John Chiang refused to cut paychecks that paid about 200,000 hourly state workers $6.55 per hour, the federal minimum. Exempt or salaried employees would get $455 a week.

"(The tentative decision) is encouraging, and it's important so that the state has the ability to control spending in tough economic times," said Schwarzenegger spokesman Aaron McLear. "But we're awaiting the court's final decision."

Because lawmakers passed a budget last week, the ruling would have no immediate effect. Still, state workers such as Susan Felt were stunned.

"I'm shocked. I can't believe it," said Felt, an 11-year employee with the state. "Everything else that's been happening, and now this."

In recent weeks, Schwarzenegger has furloughed workers and persuaded lawmakers to change state overtime policy and remove two days from the state's paid holiday schedule. Many state worker unions are in contract talks.

The Service Employees International Union Local 1000, which as the biggest state labor organization represents 95,000 workers, has tentatively agreed to a deal that includes a mix of concessions and gains.

Several labor unions, including SEIU, had sided with Chiang.

SEIU spokesman Jim Zamora said the union was "disappointed in the decision, and our attorneys are reviewing it. Beyond that, we don't have anything to say at this time."

Calls to Chiang's office Thursday seeking comment were not immediately returned.

The Schwarzenegger administration has been on a legal winning streak. Several unions have sued and lost to stop his controversial two-day-per-month furlough program, which the administration says is necessary to control state expenses during a rough economic patch.

One furlough lawsuit that the unions lost last month is being appealed. No date has been set for arguments in that case.

Judges rarely change their tentative rulings. If Judge Timothy M. Frawley sticks with the decision he issued Thursday afternoon, it will be another win for Schwarzenegger in a string of legal battles over state worker pay fought against the backdrop of California's worsening economy, falling government revenues and an epic political struggle over the state's budget.

A hearing on the matter is set for 1:30 p.m. today. Frawley could hand down a final ruling at that time or wait a few days.

Schwarzenegger in July ordered state workers' pay reduced after the Legislature failed to pass a budget by June 30, the end of the fiscal year. He contended that the law was on his side and that the move would conserve cash until lawmakers crafted a budget.

The order allowed that once the budget was passed, workers' paychecks would be restored to regular levels and that they would receive back pay. The state would not have to pay interest on the money it withheld.

But Chiang, whose office cuts paychecks for state employees, refused to carry out the order. The state Department of Personnel Administration took him to court, arguing that the law compelled the controller to cut what the state pays employees.

The administration pointed to a 2003 case, White v. Davis, in which the court decided that state workers have the right to their full wages but the law doesn't authorize their full pay until the money is appropriated in the state budget.

Frawley agreed with the administration's interpretation of the case and brushed aside Chiang's argument that the lawsuit is irrelevant and should be dropped since lawmakers have passed a budget and designated money for wages.

"(T)he principal issues in this case are likely to recur," he wrote, and therefore deserve consideration.

Call The Bee's Jon Ortiz,(916) 321-1043.