( CNN ) -- As many as 200,000 state workers in California could see their pay scale slashed to minimum wage , if orders from the governor 's office are followed . In a letter to the state controller Thursday , Gov . Arnold Schwarzenegger 's administration ordered the department to reduce the payment of state workers to the hourly rate of $ 7.25 unless a budget is reached soon . `` These are preparations for the prospect of not having a budget passed this month , '' said Lynelle Jolley with the California Department of Personnel Administration . Without a budget , the July payroll , sent to go out the end of the month , would be cut , she said . `` This is not a scare tactic , '' she said . `` This is based on a very real legal requirement . '' The legal requirement was ordered in 2003 , when the California Supreme Court ruled that the state controller had no legal authority to pay wages in the absence of a budget . `` His role is to process the payroll that we give him , '' Jolley said . But the state controller disagreed . `` I will not be following the governor 's orders , '' John Chiang told CNN Radio , calling the governor 's actions dangerous . `` I do n't understand why we would continue to impose greater hardships upon the good workers here in California and delay the economic recovery that needs to take place as soon as possible . `` It 's my responsibility to protect the state 's pocketbook , '' Chiang said , `` and even though the governor is trying to fix a budget , he understands that he had that opportunity , he still has that opportunity , and he should not put people in harm 's way . '' Chiang said he is willing to work with the governor to come up with a better solution . The wage cut directive would not affect state employees who already have a contract , Jolley said . `` Thirty-seven thousand employees are under a contract that protects them , and the state is currently in negotiations with its largest state employee union , the Service Employees International Union , '' she said . That union has as many as 95,000 workers , she said . If the governor 's order is followed , the pay cut would take effect this month , according to Jolley . The workers will get their missed wages once a budget is enacted , she said . CNN 's Patty Lane contributed to this report .
As many as 200,000 state workers face pay cuts . Gov . Schwarzenegger orders salaries to be cut to $ 7.25 an hour . Directive would not affect state employees with contract . 'This is not a scare tactic , ' official says .