California Gov. Arnold Schwarzenegger (R) vetoed bills Saturday that would have raised the minimum wage to $7.75 an hour, made Wal-Mart-like megastores more difficult to build and limited schools' ability to give students random drug tests.

The governor said the minimum wage and megastore legislation would have hurt the state's economy and said drug testing policies should be left up to school officials.

The minimum wage bill would have raised California's minimum wage from $6.75 to $7.25 Jan. 1 and to $7.75 on Jan. 1, 2006. The federal minimum is $5.15 an hour.

Bill supporters said the minimum wage has not kept up with inflation, but Schwarzenegger said the legislation would have discouraged economic growth.

"Now is not the time to create barriers to our economic recovery or reverse the momentum we have generated," he said.

The megastore bill would have required cities and counties to complete economic impact reports before ruling on proposals to build retail stores with more than 130,000 square feet and with more than 10 percent of their space to selling food. The reports would have assessed the stores' impact on other businesses, wages, public services and traffic.

Supporters, including the California Independent Grocers and Convenience Stores and several labor unions, said such stores can drive out other businesses and result in lower wages, more part-time jobs and traffic congestion. Opponents included the state Chamber of Commerce, Costco, Wal-Mart and the League of California Cities.

Schwarzenegger said the bill would have imposed "unnecessary, burdensome restrictions on businesses attempting to expand."

The school bill would have allowed random drug testing of students if they and their parents volunteered and no state or local tax dollars were used.

"I cannot support legislation that eliminates the ability of local school districts to make decisions based on the needs and values of their community," Schwarzenegger said.