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May 13, 2009 > Calif. wage cuts may threaten billions in fed aid

Calif. wage cuts may threaten billions in fed aid

By Judy Lin, Associated Press Writer

SACRAMENTO (AP), May 08 _ State officials fear California could lose billions of dollars needed to help fill the budget gap after the Obama administration determined the state violated the terms of the federal stimulus act.

A legal letter prepared for a branch of the U.S. Health and Human Services Department said California breached the terms of the act when lawmakers approved a state wage cut for health care workers they said would save $74 million a year.

The health care workers' union argued the cut violated the act because it would force counties to make up the difference.

In a letter to Secretary Kathleen Sebelius, Gov. Arnold Schwarzenegger urged the administration not to withhold the money and disputed the health department's claim.

An agency spokesman says the state could be subject only to fines.

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