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Lawmakers Approve Interest Free Loans For Federal Workers

by | Jan 22, 2019 4:26pm () Comments | Commenting has expired | Share
Posted to: Congress, The Economy, Jobs, Labor, Public Health, Public Safety, State Capitol, White House

Christine Stuart / ctnewsjunkie photo

HARTFORD, CT — With bipartisan support the House and the Senate adopted legislation Tuesday that allows the state of Connecticut to back interest free loans to federal workers impacted by the shutdown.

The House passed the measure 127-15, and the Senate passed it 32-1. Sen. Rob Sampson, R-Wolcott, was the only Senator to vote against the measure.

Gov. Ned Lamont signed the bill in his office shortly after the votes.

He said it shows that “what you do in government makes a difference.”

Under the agreement non-essential workers, as well as essential federal workers who are required to report to work without pay, will be able to obtain interest-free loans provided by banks or credit unions. Those loans will be backed by the state.

The initial loans will afford impacted employees up to one month’s net pay, capped at $5,000.  The employees can re-apply for these loans up to two more times.

The bill prohibits interest on the loans for 270 days after the shutdown ends. And all program loans have a 90-day grace period during which no interest accrues and the borrower is not required to make payments. The grace period begins when the borrower’s employer is funded.

But there were concerns from some lawmakers about the state’s responsibility.

The bill caps the amount the state may expend to honor loan guarantees when the amount paid exceeds 10 percent of total loans issued. That means the state’s exposure is about $2.1 million, because the maximum amount of loans — if all 1,500 federal employees in Connecticut accessed three loans each — would be around $21.2 million.

Rep. Tom Delnicki, R-South Windsor, wondered what would prevent federal workers from going to multiple financial institutions and to obtain multiple loans.

Rep. Ezequiel Santiago, D-Bridgeport, said there’s nothing in the legislation to address that.

Delnicki ended up supporting the bill. He said he is sympathetic to essential workers like Transportation Security Authority officers who are required to report to work without pay.

Federal employees are expected to miss another paycheck this week. The shutdown has now lasted more than 30 days.

Rep. Christine Conley, D-Groton, said the legislation will provide some relief for the U.S. Coast Guard families who live in her district where the community has stepped up to provide food and assistance to the families.

“They don’t need more charity,” Conley said. “They need a paycheck.”

House Minority Themis Klarides, R-Derby, said these federal employees are “victims of federal government dysfunction.”

She added that it also gives cities and towns the authority to defer deadlines for the payment property taxes for the impacted federal employees.

Sen. John Kissel, R-Enfield, said he supports the measure, even though it’s controversial in his district.

“I have heard from folks in my communities both for and opposed to this bill,” Kissel said.

He said those in his district who are unemployed feel like it’s unfair these workers get help while they struggle to find work and get behind on their bills. But he also represents Bradley International Airport where the TSA officers and air traffic controllers are working without pay.

“There are many folks who live paycheck to paycheck,” Kissel said. “It’s a struggle. So I feel for any individual who is compelled to go to work and is not getting paid.”

Sen. Alex Bergstein, D-Greenwich, who co-chairs the Banking Committee, said public-private partnerships can be used to solve many of Connecticut’s issues. She said the banks really stepped up and showed their civic spirit by providing this support.

“We all share responsibility for one another,” Bergstein said.

Sampson said there are still too many unanswered questions about the legislation, which was passed through an emergency order.

Some federal employees have been furloughed and can apply for unemployment. Others, like the TSA workers, cannot apply for unemployment and are being required to work without pay.

Sampson wondered whether the loans needed to be repaid before real estate taxes? Or would unemployment compensation need to be paid back first?

“I think it’s important that we answer these questions before we pass things into law,” Sampson said.

There were no immediate answers to his questions.

House Majority Leader Matt Ritter, D-Hartford, bristled at the notion that Connecticut was somehow singling out a group of individuals for a handout.

“They are deemed essential workers. They have to go to work and they are not paid and they cannot apply for unemployment compensation,” Ritter said. “There is nobody else in this state I can think of the same rule applies to.”

Lamont’s staff said that Maine and Rhode Island reached out to his office for more information on the legislation, which is now law.

Federal employees interested in the loans should contact their bank or credit union to determine whether they intend to participate in the program. If they are not, loans may also be available through a bank or credit union other than employees’ usual financial institution.

The loans may be available before the end of the week.

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