HARRISBURG, Penn. — With the state of Pennsylvania failing to pass a budget, the largest CU in this state is assisting affected members with a 0% loan offer.
The $3.4-billion Pennsylvania State Employees CU made state workers aware early in June that it will loan them up to $1,000 per biweekly paycheck to tide them over in the event the state legislature didn't pass a budget. The no-interest deal remains in effect 60 days after a budget agreement is reached, after which the rate moves to 3.9% fixed on the existing balance at that time. "In the 60 days after an agreement is signed, members will have received their back pay and will be able to pay off the loan, if they choose," said Barb Bowker, PSECU VP of marketing. "We wanted to make sure the product we give our members does not get them deeper into debt."
The CU's concerns about members' ability to get by in the event of an impasse have been greater in 2009 than in years past due to the economy. Talk about a budget impasse occurs almost every year in Pennsylvania, explained PSECU PR Manager Nate Muniz, who shared with CU Journal that the credit union believed, well before the impasse was reached, that a budget would not be approved by the June 30 deadline.
Political maneuvering is always part of the process, acknowledged Muniz, but there have been big problems this year, he said. "It is probably is going to take some combination of major budget cuts and tax increases. And there are both sides on those issues-people don't want to cut the budget, and people don't want to raise taxes. The Commonwealth is staring at a $3.2 billion hole in the budget and they are also looking ahead to what will happen during 2010. They don't expect state revenues to increase through the next fiscal year, so they are expecting to deal with this situation again next year. I think one of the reasons this has become a bigger issue is because the commonwealth is looking for a compromise to address the budget situation for more than just this year."
With the budget agreement not reached, state workers' July 17 paycheck will be the first payless payday, that is, if an agreement is not finalized by then.
PSECU has been closely monitoring the situation, Bowker said. "We have several contacts at the commonwealth we have been working with. We have been able to get our information up on the state's employee portal with a link to our website for the specifics of the loan." The CU had been getting responses from members, and from non-members asking to join. "New members are not the intent of our effort, but we know that will happen," Bowker said. "We've already had numerous inquiries."
The credit union said it began getting requests for the 0% loan in the second half of June. Previously when talks of an impasse have occurred, PSECU has been ready with its traditional products, like skip-a-pay and loan deferral. This is the first time since 1991's budget impasse that PSECU has created a special product, Bowker said.
The $294-million Belco Community CU in Harrisburg, the $14-million Oil Country FCU in Titusville, and the $1.6-billion Members 1st FCU and the $165-million Americhoice FCU in Mechanicsburg have also announced special programs to help employees affected by the budget impasse. Pennsylvania Gov. Edward Rendell praised PSECU and Citizens Bank for their special programs during a press conference. The State House has added session days for all of July, and, as of press time, discussions were to begin again on July 3.
