January 22, 2019

Legislature approves loans for unpaid federal workers

PHOTO | HBJ File
PHOTO | HBJ File
The State Capitol in Hartford.

The General Assembly overwhelmingly adopted a measure Tuesday creating an emergency, interest-free loan program for an estimated 1,500 federal employees in Connecticut affected by the U.S. government shutdown.

The measure, which passed 127-15 in the House and 32-1 in the Senate, was signed by Gov. Ned Lamont a few minutes afterward.

"We did a really good thing today," Lamont said during a press conference with legislative leaders in his Capitol office, calling it "a bipartisan victory. It helps out a lot of our federal employees here in the state who've been working their heart out … and not getting paid for the work they're doing — and are really in a pinch."

"This is why we're not in Washington," House Majority Leader Matt Ritter, D-Hartford, said during the House debate, "because we don't turn a blind eye to the struggles of people."

"I'm proud that this legislature stood up and said we need to govern, collectively," said Senate Minority Leader Len Fasano, R-North Haven, said on the Senate floor.

"Connecticut has taken the lead on a national issue and is showing the country that we can work together," said Sen. Alex Berstein, D-Greenwich, co-chairwoman of the Banking Committee, who called it an excellent example of a public-private partnership.

Majority Democrats backed the measure unanimously in both chambers. In the House 44 out of 59 Republicans voted in favor while Sen. Rob Sampson of Wolcott, one of 13 GOP senators, cast the lone dissenting vote in that chamber.

The loan program relies on a partnership between the state and any banks and credit unions that choose to participate in the program. Lamont and Webster Bank CEO John R. Ciulla unveiled an outline of the program last week and said they expect more institutions to become involved.

"This is strictly voluntary for the banks and credit unions that want to participate," said Rep. Ezequiel Santiago, D-Bridgeport, the other co-chairman of the Banking Committee.

Participating financial institutions would make affected employees eligible for as many as three loans. Each would be equal to the worker's monthly, after-tax pay, not to exceed $5,000 — minus any unemployment compensation.

Normally, these workers would be unable to receive state unemployment compensation because, technically, they remain employed. But this measure allows federal workers without pay to collect unemployment benefits.

The state would guarantee up to 10 percent of the loans, which must be interest-free for at least 270 days after the shutdown ends.

An estimated 400,000 federal workers nationally have been asked to remain on the job without pay, with the promise that retroactive compensation will be provided once the shutdown — which dates back to Dec. 22 — has been resolved.

The Lamont administration estimates 1,500 federal workers in Connecticut remain on the job without a paycheck. Among the major job categories affected by the shutdown are air traffic controllers and certain Environmental Protection Agency staff.

According to the legislature's nonpartisan Office of Fiscal Analysis, banks and credit unions likely would issue $21.1 million in loan. Given the state's guarantee of 10 percent, its maximum exposure through this program would be $2.1 million.

Analysts added that given the national loan delinquency rate of 2.28 percent, the state's likely cost due to loan repayment defaults would be less than $500,000.

The state's legislation mirrors similar efforts being made in Washington. A bill introduced last week by a group of 70 House Democrats would provide loans up to $6,000 per employee, at zero percent interest, to federal employees impacted by the shutdown. The loans would be issued by the treasury department.

The bill adopted Tuesday in Connecticut also authorizes municipalities to establish a tax-deferment program for affected federal employees. This could involve property taxes due on land, buildings, and motor vehicles as well as water and sewage treatment service assessments. Otherwise municipalities would be forced to impose the 18 percent penalty rate on overdue property taxes that is mandated by state law.

Sen. Cathy Osten, D-Sprague, whose district includes hundreds of U.S. Coast Guard employees, said f0r many of the families struggling without a paycheck, the problems are more pressing than mortgage or rent payments.

"It is much more basic than that," Osten said, adding that many of her constituents need the help siply to buy groceries or winter heating oil.

But some questioned whether Connecticut was overstepping its bounds, or rushing to assist federal employees when there are many others with equally pressing problems in the state.

Rep. Tim Ackert, R-Coventry, who opposed the bill, nonetheless scolded the legislature for thinking small. While state officials responded quickly to assist a struggling class of federal employees, the ranks of those who need help are much larger.

"Why is this so narrow-minded?" Ackert said of the bill. "There are so many people out there hurting in the state."

Some legislators argued state government should not intervene in a federal budget crisis, or get involved in loans for a select group of employees in need.

"This is a federal issue," said Rep. Doug Dubitsky, R-Chaplin.

"Where does this stop?" asked Rep. Michael France, R-Ledyard. "This is picking a particular group of employees and setting them apart. … This is, on its face, unfair."

Sampson said he is "extra sympathetic" to those working without pay, but "there are many emergencies going on" among Connecticut households.

House Minority Leader Themis Klarides, R-Derby, said that while there are concerns state government is entering an arena it should not, it will help families pay their bills and "put food on their table," she said. "We're doing something to help our citizens in Connecticut … who are victims of the dysfunction in Washington."

"We have plenty of time to fight, plenty of time to disagree," Klarides added. "This is not a time to do that."

This story has been updated

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