Federal employees in Connecticut working without pay during the government shutdown are eligible for interest-free loans through Webster Bank thanks to a public-private partnership, Gov. Ned Lamont announced Tuesday.
There are about 800,00 federal employees feeling the financial pinch as they remain furloughed or are working without pay. Some have taken second or third jobs to make ends meet.
Approximately 1,500 federal employees in Connecticut are impacted by the shutdown. The state Department of Labor has already been offering some of them employment benefits, but only furloughed employees who are not allowed to work can file for unemployment. That means those working without pay were considered ineligible for benefits.
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Lamont said approximately 80 percent of those federal employees in Connecticut are considered essential and continue to work without pay. The state is working with Webster Bank and the Connecticut Bankers Association to offer interest-free loans to those workers. The state will backstop the loans to guarantee payments.
"I think Connecticut is a leader here and I want to be a leader here. I want to show how we can work collaboratively with the private sector to make this work and I’d like to think that other states across the country will use this as a model," Lamont said.
Specific details about how long the loans will run and repayment plans are still being developed, Webster Bank CEO John Ciulla said. Ciulla added that they expect a high rate of repayment once workers receive their back pay from the federal government.
The loan amount being provided amounts to $5 million, said Lamont, but the loans are being provided at minimal risk to both the State of Connecticut and the banking community.
Federal workers will have to prove that they are in fact part of the partial shutdown and working without pay. The loans will be equivalent to the worker's pay, and Ciulla said payment schedules would be determined once loans are distributed.
Lamont said he is optimistic that other banks will get involved. The plan is in the early stages and he hopes to work further with labor leaders and the legislature to get the loans out to those in need.
The shutdown is now in its 25th day, making it the longest shutdown in history with no resolution in sight. This shutdown is the result of the ongoing fight between President Donald Trump and Democratic lawmakers over funds for a U.S.-Mexico border wall.
Senate Republican Leader Len Fasano (R- North Haven) released the following statement on the governor's plan:
“I appreciate Gov. Lamont’s efforts to create a public private partnership between government and business leaders to quickly solve a problem impacting state residents. All our hearts go out to the federal employees who are struggling to support their families at this time. The proposed temporary support is a clever and unique way to leverage a partnership to help those in need. I look forward to reviewing the details of this proposal and am hopeful that we will see necessary protections to ensure taxpayer funds are protected at the same time assistance is provided to the workers who are most in need.”
The state DOL said they are doing what they can within federal guidelines to help, but even those furloughed employees who can file for unemployment may not see any. The department still needs to be able to request information on those employees, which may be impossible due to the shutdown.