California's budget mess is spawning a personal financial crisis for legislative aide Bill Bird. With his savings running as dry as the state treasury and a "massive" mortgage to shoulder, Bird faces a cash crunch come July if a budget isn't in place.
Like some 500 to 600 other Capitol workers, Bird will be among the first state employees to lose their paychecks should California begin the new fiscal year July 1 without a budget, as it does most years.

"Last year I went without a paycheck from July to September and it was really hard," said Bird, communications director for Sen. Rico Oller, R-San Andreas.

As that angst filters through the community, Sacramento area credit unions are jumping in with offers of no-interest loans to state employees if the budget fails to materialize and their paychecks vanish.

Credit unions that serve state workers have provided such financial relief quietly during past budget battles. But this year is worse. Much worse. Adding to the anxiety of a record-high $38.2 billion deficit: a recent California Supreme Court decision that could limit most state workers' pay to $5.15 an hour if a budget is not passed by July 1.

The Sacramento region is home to more than 76,000 state workers. That has prompted some credit unions to undertake high-profile marketing campaigns to publicize help for budget-stressed workers wondering how they'll make next month's mortgage payment.

"We're Here for You!" proclaims a newspaper advertisement for Sacramento-based Golden 1, California's largest credit union.

"As a California state or legislative employee, when you join the Golden 1, open a checking account, and sign up for direct deposit by June 30, 2003, you may become eligible for support from the credit union should there be a budget delay," the ad says.

No need to convince Bird. He signed up for direct deposit with Golden 1 so he would qualify for an interest-free loan to cover his salary if the paychecks stop coming. "You see the writing on the wall," he said.

Golden 1 will mail no-interest loan applications to direct-deposit customers by the end of June if their paychecks seem to be at risk, said Chief Executive Officer Teresa Halleck. Golden 1 counts 40,000 state employees among its half-million members.

In recent days, state Controller Steve Westly has met with bank and credit union officials to discuss the budget imbroglio, said Westly spokesman Sandy Harrison.

"We didn't argue any one way or the other about what they should do. We just wanted them to know the situation," he said.

Those state employees who stand to be affected first -- legislators, legislative staff, constitutional officers and the governor's appointees -- won't feel the sting until mid-July, when Westly must stop their paychecks if there's no budget.

However, Westly has pledged to continue paying full salaries despite the California Supreme Court decision limiting most state employees' pay to federal minimum wage.

Meanwhile, Schools Financial Credit Union will launch an advertising campaign directed at state workers next week if a budget is not passed by Sunday's constitutional deadline, said Mary Robertson, vice president of marketing.

"We're starting to get questions from branches" about state employees worried about losing their paychecks, she said.

Half of the Sacramento-based credit union's 112,000 customers are state workers and some will qualify for no-interest loans. Members who have direct deposit can take out loans to cover their full salaries. Checking and savings account customers will be offered interest-free loans to cover 75 percent and 50 percent of their monthly income for up to three months, respectively.

North Highlands-based SAFE Credit Union also is considering an ad campaign and will send out e-mails alerting customers about the availability of no-interest emergency loans and payday advances, said Faith Galati, the credit union's vice president of marketing.

Another Sacramento-based financial institution, FIRST US Community Credit Union, is offering zero-interest loans for direct-deposit customers for the first month and low-interest loans until the budget is passed.

While the advertisements have attracted some new customers, Golden 1's Halleck said marketing didn't motivate the credit union's ad campaign.

As nonprofit organizations, credit unions are required to return increased revenues to their members in the form of lower interest rates on loans and other services.

Some of California's biggest banks, meanwhile, have not decided what, if any, relief to provide state employees.

Bank of America spokesman Ken Preston said executives still are discussing special services the bank might offer.

A Wells Fargo spokeswoman declined to comment.

Gov. Gray Davis spokeswoman Hilary McLean applauded the credit union programs. "It's extremely helpful to all the state employees who are hard working and are victims of a delayed budget," she said. "It's a very nice accommodation."

In fact, the loan programs are life-savers for many rank-and-file legislative staffers who find it difficult to save enough money during the year to cover several payless months.

"Whenever the zero-interest loans or even low-interest loans are offered, I take advantage of them," said Matt Gray, a senior policy adviser to Sen. John Vasconcellos, D-San Jose. "I need to do whatever it takes to make sure we can continue our lives as usual."

Gray, who banks with Golden 1, said he puts away money throughout the year in anticipation of the inevitable budget-related pay delays. He said he'll needs the loans, however, to support his wife and 2-year-old daughter and to cover two mortgages.

Given that California has failed for 16 of the past 25 years to have a budget in place by July 1, the fact that Gray's paycheck takes an annual summer vacation is hardly a surprise. Still, the uncertainty is worse this year. "It's more of an emotional tax for me personally because it's an added stress to our life," he said.

In the meantime, those who can't handle the uncertainty will rely on the loans.

"You either go for short-term loans or you ride out the storm," said Bird, the legislative staffer, "and I think the storm's going to be a lot longer this year."