SACRAMENTO, Calif. — In response to California Governor Arnold Schwarzenegger's threats to reduce state employee wages to the federal minimum as early as Thursday, The Golden 1 Credit Union is ready to offer its original SEG a two-tier state budget loan, approved last week by the board.
It's unlikely workers will receive minimum wage pay, because the threat is meant to pressure state lawmakers into passing Schwarzenegger's budget, which missed a July 1 deadline. But the threat isn't entirely baseless: The Golden 1 President/CEO Teresa Halleck said state workers have received IOUs in place of pay checks in the past, and the state won a court case in 2003 that affirms a right to cut pay.
The credit union's solution is short-term, no-interest loans that will be offered to affected members, so long as they signed up for direct deposit by June 30. Existing members adding direct deposit after June 30 are eligible for a low-cost 4.99% loan. Loans are due once state workers receive their retroactive pay upon budget approval.
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If put into action, the order would affect 200,000 state workers, half of which are members of The Golden 1. Approximately 50,000 state workers have active direct deposit with the credit union, Halleck said.
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