California state employees offered low cost loan options
In the state of California, where a state budget has yet to be passed, state employees are facing a huge pay cut. The governor has asked that until a budget is passed, all employees have their pay cut to minimum wage. Some banks and credit unions are offering a quick payday to these employees, including no-interest installment payday loans.
The California pay cut
At the beginning of the California fiscal year on July 1, the state had passed no official budget. Without the budget in place, the state of California is facing a $19.1 billion budget deficit. Governor Arnold Schwarzenegger ordered that all 200,000 state employees have their wages reduced to minimum wage until a budget is passed. State Controller John Chiang issued a statement saying that worker wages cannot be reduced until the state budget system is completely overhauled — something that will take at least two years and several million dollars.
“Impasse” loans offered
Several large banks and small credit unions, including Wells Fargo and Bank of America, are offering no fax pay day loans called “budget impasse loans.” These loans are offered for no interest and not even a basic credit check. Instead, state employees are extended extra credit or cash money to make up the gap. When the state budget is passed, employees will be given a retroactive payment that they can use to pay off these impasse loans.
Qualifying for impasse loans
California state employees who need to get a personal loan to cover the budget impasse do not immediately qualify for these zero-interest loans. Instead, the state employees must already have an account with the bank or credit union. For many of the financial institutions, the state employee’s pay must also be deposited directly into his or her bank account. Given that California has only passed a balanced budget by the beginning of the fiscal year in 10 of the last 34 years, it is not surprising that many banks have created solutions to help employees that are left in the dust.