Employees in California are facing a gigantic pay cut as the spending budget has yet to be passed. California's governor has asked that all paydays be cut to federal minimum wage until a spending budget is passed. Some banks and credit unions are offering a instant cash to these employees, including no-interest installment payday loans.
Cutting employee pay in California
At the beginning of the California fiscal year on July 1, the state had passed no official spending budget. Without actually passing a budget, California is going to have 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. The state budgeting and payroll system, though, needs an overhaul and state Controller John Chiang said the reduction wouldn't be possible.
Banks and credit unions offer employee "impasse" loans
Bank of The US and Wells Fargo have began offering no faxing payday loans called “budget impasse” products. There's no credit check and no interest on these “impasse” loans. These loans either provide money or extended credit to state employees. When a state budget is passed, eventually, the employees will get a retroactive payment they can use to pay back these loans.
Qualifying for impasse loans
California state employees who need to get a personel loans to cover the spending budget impasse do not right away qualify for these zero-interest loans. Instead, the state employees must already have an account with the bank or credit union. Given that California has only passed a balanced spending budget by the beginning of the fiscal year in 10 of the last 34 years, it is not surprising that numerous banks have created solutions to help employees that are left in the dust.