Treasurer, Credit Unions Offer Loans To State Workers Amid Budget Standoff
CHICAGO (CBS) -- Facing the possibility of not receiving any paychecks amid the ongoing state budget stalemate, Illinois state workers were getting a glimmer of hope, in the form of loans from employee credit unions.
State Treasurer Michael Frerichs said, through his office's linked-deposit program – which provides banks with money for specific loan programs – some state employee credit unions will offer loans to tide over their members if payroll checks end up on hold.
Workers could get up to 50 percent of their normal pay.
Frerichs said up to $50 million worth loans would be made available to more than 60,000 state workers beginning July 15, if a budget deal isn't reached in time to make the first payroll of the new fiscal year on that date.
"These will be no-interest loans to credit union members. The loans will not have to be repaid until 31 days after paychecks resume," he said.
If workers need more time to pay back their loans, they would be charged a 9.9 percent interest rate, which is still much lower than the market rate, according to Illinois Credit Union League president Tom Kane.
"Credit unions are not-for-profit cooperatives owned by and run by the benefit of its members; the very people who will benefit from the programs being announced here today," he said.
Kane said he'll try to convince more credit unions to participate.
Frerichs said he hopes the budget standoff will end soon, but he said he didn't want to take any chances, and leave state workers with few financial options if they don't get paid.
"Whatever your position with the budget impasse, all should agree that those employees are not to blame, and that this is unfair and harmful to a lot of lives in this state," he said.
The treasurer said the loans could help state workers pay rent, mortgages, and other vital bills. They would be made available if a budget solution is not reached by the time the next payroll is due on July 15.