Tens of thousands of state workers started off the new year with a spring in their step.
A judge late last week handed Service Employees International Union (SEIU) Local 1000, the state's largest public employee union, a victory, ruling Schwarzenegger overstepped his authority when he ordered three unpaid furlough days a month to save more than a billion dollars.
"I was just elated to hear that, so far, we have won this step towards possibly getting our furlough days back and even some pay," said Paula Hayes, a DMV Worker.
While the union plans to seek back pay and an immediate stop to the furloughs, the Schwarzenegger administration is already preparing an appeal to the California Supreme Court.
The administration will argue the governor's use of the California Emergency Services Act is necessary to prevent the state from going over a financial cliff.
"We believe, just like the private sector is cutting back, that state workers need to cut back as well," said Aaron McLear, the governor's press secretary. "There's no reason state workers should be shielded from the same economy that everybody else is facing."
The furloughs have been a point of contention between the governor and state workers for more than a year now.
Twenty-four lawsuits altogether have been filed.
State Assembly Speaker Karen Bass has concerns over what was essentially a 15-percent pay cut.
"It has hit all the small businesses in the area," said Bass. "It has led to the foreclosures because some state workers were not able to pay their mortgages."
But with the recession forcing leaders to slash tens of billions from the state budget last year, there is nowhere else to cut, which could mean the dreaded "L" word.
"It'd be a lot of layoffs," said McLear. "I don't have the calculation, but it would be layoffs that would equal $1.4 billion. The average state worker probably makes $50,000 to $60,000. So you can do the math from there."
State workers think there are ways to shrink the budget without furloughs or layoffs.
"I don't understand why the governor can't get it together and figure out a way so that we can have it both ways," said Hayes, the DMV worker.
In case you're wondering what the math is: The state would have to reduce its workforce by 28,000 people to achieve more than a billion dollars in savings. California's unemployment rate is currently above 12 percent.