Unions Back Bill to Fix Loan Program for Workers Impacted By State & Federal Government Shutdowns

State and federal employee unions are backing legislation that would improve a new law that provides access to state-backed, no-interest loans for federal and state workers who have to work without pay during government shutdowns. On Tuesday, union leaders testified in support of LD 2102, An Act to Clarify and Strengthen the Government Shutdown Loan Guarantee Program, sponsored by Kristi Mathieson (D-Kittery), makes improvements to the loan program based on our experiences during last fall’s federal government shutdown, the longest in U.S. history, lasting 43 days.

At the public hearing for the bill, workers applauded the existence of the program and testified that implementation of the loan program fell short because few banks and credit unions participated in the program. Only three lenders who offered loan options for people who were not members of that institution prior to the shutdown, and some of those lenders had county specific geographic residency requirements.

Cutler Federal Firefighters President Scott Lizotte (IAFF F-316)  noted that there were several barriers that deterred federal firefighters who work at the Naval Support Activity (NSA) in Cutler from accessing the program. This included the inability of lenders to run credit checks, the 10 percent cap on guaranteed payments and lack of funding.

Another barrier was the requirement by lenders that employees first apply for unemployment benefits or provide proof of eligibility to offset the loan amount. None of his members were eligible for unemployment benefits because they were furloughed but still required to report for duty as excepted/essential employees.

“In our local experience, none of our members successfully obtained a loan under the program, despite being eligible,” said Lizotte. “Many members simply gave up rather than navigate this additional hurdle in an already chaotic time. This undermined the program's goal of speedy, accessible support.”

LD 2102 makes several fixes in the law to ensure federal workers are able to secure loans during state and federal government shutdowns by:

• Ensuring that eligibility is not dependent on applying for unemployment benefits, credit checks, membership status, or in-person appearance.
• Repealing the 10 percent cap on guaranteed payments, eliminating lender uncertainty.
• Providing an additional $250,000 allocation to strengthen the fund.

Members of Portsmouth Metal Trades Council, the Carpenters Union, IUPAT Dc 35 and the Maine Service Employees Association (SEIU 1989) also testified in support of the bill.  The bill will have a work session in the coming weeks.