Does Calif. Gov. Schwarzenegger have authority to lower state employees salaries to minimum wage?

Gov. Schwarzenegger has written an Executive Order to the state comptroller, to lower the majority of California’s state employees salary to minimum wage, until a budget is passed. the state is currently in a $19 billion dollar deficit. does this governor have the authority to make such a drastic call in that state and why is California $19 billion dollars in the red? could it be the influx of illegal immigrants?