SACRAMENTO (AP) _ Gov. Arnold Schwarzenegger and state Controller John Chiang are headed for a court fight over the governor’s attempt to cut the pay of about 175,000 state employees until lawmakers approve a state budget.

Schwarzenegger’s Department of Personnel Administration filed a lawsuit against Chiang late Monday in Sacramento County Superior Court. The suit says the state Constitution and several sections of law prohibit the state from paying full wages without approval of a budget.

“Except where payments are self-executing under the California Constitution, the state has no authority to pay state employees their full salaries where it does not have an appropriation such as in this case, where there is no budget for fiscal year 2008-2009,” the lawsuit says.

Chiang, a Democrat, has balked at making the pay cuts, saying the state has enough money to cover its needs into October.

“The governor has created a solution to a problem that does not exist...,” Chiang said in a statement after the lawsuit was filed.

“Rather than focus on building consensus for a budget that addresses California’s long-term fiscal problems, the governor seems adamant on picking a fight over whether state employees are entitled to the wages they have worked for and earned.”

He said he was confident the court would agree with him that it was impossible to alter the pay of so many state employees in a short period of time.

The lawsuit could add another complication to the already strained negotiations over a state budget. Republican and Democratic lawmakers differ about how to close a $15.2 billion deficit and have been struggling to find common ground since the fiscal year began on July 1.

Schwarzenegger met Monday with the Legislature’s Democratic leaders to try to reach a budget compromise.

“We’re still talking. We haven’t thrown anything at each other,” Senate President Pro Tem Don Perata, D-Oakland, said after emerging from the governor’s office.

The Republican governor had hoped his executive order on July 31 would pressure lawmakers to compromise. In it, he directed that the pay of nearly 140,000 rank-and-file employees be cut to the federal minimum wage of $6.55 an hour.

About 30,000 management employees would be paid $455 a week under the order. Another 8,000 state workers without federal minimum wage protection, mostly doctors and attorneys, wouldn’t be paid at all until a budget was adopted.

Schwarzenegger said the cuts were needed to prevent the state from running out of money as lawmakers debate how to erase the budget deficit.

Representatives of Chiang and the governor met last week to discuss how Schwarzenegger’s order could be implemented.

The administration suggested that the controller could suspend the employees’ regular pay and implement the lower compensation as a “special pay differential.”

Administration officials said that was the same process employed when pay for legislative employees and certain others is suspended during budget impasses. A controller’s official responded on Monday before the lawsuit was filed, saying the process wasn’t that simple.

Don Scheppmann, head of the controller’s personnel and payroll services division, said it could “subject the state to further litigation and unnecessary costs.” In a letter, he asked to be given until the end of the week to provide a “thoughtful and thorough analysis” of the options proposed by the Schwarzenegger administration.

“Your concept would not only require stopping pay, but also issuing minimum wage payments and determining the appropriate treatment of multiple deductions for each employee,” Scheppmann said. “Then, after the budget is passed, we would need to restore full pay and again determine the appropriate level of deductions offsetting the prior adjustments.”

He said there were several other questions that needed to be answered, including whether the executive order would cover California State University employees and whether the state would freeze hiring and employee transfers to make the payroll switch easier.

“Implementing system changes of the magnitude needed to accurately pay each employee should not be taken lightly,” Scheppmann said. “If they are not performed thoughtfully and accurately, the system changes could subject the state to further litigation and unnecessary costs.”

A spokeswoman for the Department of Personnel Administration, Lynelle Jolley, said the department had provided the controller’s office with “far more details” about how to implement the pay cuts than (Scheppmann’s letter) indicated.

She also said a 2003 state Supreme Court decision supported the administration’s position.

“We don’t believe we are in a position to wait much longer for resolution of this question,” she added when asked why the administration had decided to go ahead with the lawsuit.

The state already is being sued by the Service Employees International Union over the provision in Schwarzenegger’s order that laid off more than 10,000 temporary, part-time and contract employees.

SEIU Local 1000, which represents 95,000 state workers, said it would side with Chiang in fighting the executive order.

“The governor wants to treat state workers like pawns,” said Yvonne Walker, the local’s president. “John Chiang treats us like people, with families.”