B of A Declines to Aid State Workers in Budget Impasse : Finance: Bank of America says it won’t give special loans to government employees who go unpaid.

Bank of America, the state’s largest bank, has served notice that it has no plans to provide special loans to state employees if they go without paychecks as a result of California’s budget crunch, it was learned Wednesday.

Some credit unions and banks around the Capitol are planning to issue low-interest, short-term loans to state workers. But Bank of America sent a letter to the state Senate saying it will not “serve as a shock absorber in this year’s budget impasse” by giving such loans if the deadlock goes beyond July 31.

“As much as we would like to be able to assist those state employees negatively impacted by the state’s failure to complete a budget in a timely manner, we believe that to do so would contribute further to the budget gridlock,” the Bank of America letter said.

“California,” the letter added, “can ill afford to let this budget situation continue unresolved at a time when some areas of the state are only beginning to experience relief from the recent recession.”

The letter, signed by Frank Abraham, the Los Angeles-based executive vice president in charge of government accounts, went to the state Senate on Monday in response to a letter from the upper house asking banks to assist employees who will not be paid during the budget deadlock.

“We believe that to serve as a shock absorber in this year’s budget impasse only contributes to lengthening this emergency,” the letter said. “It is in the best interest of all Californians that this budget gridlock be resolved as quickly as possible.”

Although many state workers do their banking with credit unions near the Capitol, Bank of America has a busy branch across from the building, and the letter came as a shock to some staffers.

In 1992, when California went without a budget for two months, the state paid its workers and outside vendors with IOUs, which were honored by banks and credit unions throughout the state.

A federal court has since ruled that rank-and-file state workers covered by the federal Fair Labor Standards Act must be paid in real money, not scrip. But as many as 33,000 state workers who could go without pay are not covered by the federal labor law, and Controller Kathleen Connell has said state law appears to preclude her from issuing them checks until a budget is in place.

Most of the workers affected are managers, department heads and professionals such as lawyers and physicians who are paid monthly. They will miss their checks if there is no budget by July 31. Many legislative staffers are paid twice a month, with a check due Friday. They all will receive back pay once the budget is in place.

Meanwhile, the budget impasse entered Day 13, and the Legislature’s leaders were increasingly doubtful Wednesday that a deal would be reached quickly.

Gov. Pete Wilson had said last week that he believed an agreement could be struck by week’s end. But as he continues to meet with Senate and Assembly leaders, lawmakers now believe budget negotiations will go into next week.

“We keep talking about small things,” Senate President Pro Tem Bill Lockyer said, emerging from a meeting with Wilson and other legislative leaders Wednesday. “No, we talk about some big things--we talk about it.”

Assemblyman Jim Morrissey (R-Santa Ana) and several other GOP lawmakers announced that they are introducing a constitutional amendment to deny legislators their salaries--$72,000 annually--and $109 per diem for each day they fail to adopt a budget. Under Morrissey’s proposal, lawmakers could not receive their pay retroactively.

The state has been without legal spending authority since the fiscal year began July 1. The budget must be approved by a two-thirds vote of the Assembly and Senate.