If it’s summer, it must be time for another budget crisis in California, the Federal government’s reluctance to provide bailout money and a recent court decision making things even more complicated this year as detailed in this Bloomberg story about how banks are responding to the pay cuts expected later this month.

Banks and credit unions will offer zero-interest loans and other assistance to the 200,000 California government employees who may see their pay reduced to the minimum wage as a result of the state’s budget stalemate.

The Golden 1 Credit Union, a lender that caters to state workers, will offer zero-interest loans to customers whose pay falls because of the stalled spending plan, according to a July 2 statement. About 1,100 legislative aides and gubernatorial appointees whose pay was stopped on July 1 already have access to so-called budget-impasse loans, said Donna A. Bland, the company’s chief financial officer.

“We’re trying to show our support for our state-employee members,” Bland said in a telephone interview. Golden 1, based in Sacramento, the state capital, describes itself as the sixth- largest credit union in the nation with about $7 billion in assets.
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California’s Republican governor, Arnold Schwarzenegger, and its Democrat-led Legislature are at odds over how to close a $19.1 billion deficit for the fiscal year that began July 1. The state has passed its budget by the start of the fiscal year only 10 times in the past 34 years.

The recent court decision that upheld Schwarzenegger’s minimum wage order from last year (though, it wasn’t needed at the time) implies that Controller John Chiang may have to actually write those smaller checks this year, though he certainly doesn’t seem to be too happy about doing so, particularly since he’s running for re-election in the fall.