State lawmakers to weigh loan help for federal workers
Updated 8 a.m. with clarification on repayment terms
Thousands of government employees in Minnesota who have gone a month without pay due to a partial federal shutdown could soon have access to interest-free loans backed by the state.
A bill introduced Thursday in the Minnesota Legislature would allow affected federal employees to access no-interest private loans of up to $5,000 per month. The state would provide security to lenders, backed up by the general treasury.
State Rep. Zack Stephenson, DFL-Coon Rapids, said time is of the essence.
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“I’m talking to a lot of federal workers who are making really difficult decisions: Do I pay the mortgage this month or do I pay the daycare bill? Do I refill the grocery cabinet or do I refill a prescription?” Stephenson said. “These are choices we shouldn’t be asking our federal workers to make. These are our neighbors and our colleagues and we need to make sure they are rewarded for the hard work they do on our behalf.”
The bill is slated for its first hearing early next week and could hit the floor after a couple of committee stops. A Senate companion is due for introduction next week.
Applicants would have 180 days after the shutdown to repay the loan or some interest could accrue, although there would also be a grace period that could extend the interest-free period. The window for applying for a loan would close the day after the shutdown ends.
Other states, including Illinois and Connecticut, are also weighing versions of loan guarantees for federal employees within their borders. It’s a new concept for Minnesota.
“I don’t think that we’ve ever been in a situation that’s been so long where it’s needed to be done in the past,” Stephenson said.
Of course, it would all be moot if there’s a sudden deal to reopen federal agencies. Stephenson said he’d be just fine with that because it would mean that federal paychecks would be reinstated.