Payday blues

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This was supposed to be state government payday, an occasion public workers anticipate not just as the beginning of the weekend but as a time to settle up with lenders and, hopefully, have a little left over to enjoy their leisure. As most state employees surely know, or soon will learn to their disappointment, they aren’t getting paid today. Their employer has told them, in memos over the past couple of months, that their final paychecks of the 2011-2012 fiscal year will be issued the Monday after the weekend instead of the Friday before.

State Journal reporter Kevin Wheatley checked with the Kentucky Association of State Employees and the American Federation of State, County and Municipal Employees and found that while public employees have been accustomed to maintaining a stiff upper lip through two years of no cost-of-living increases and six unpaid furlough days, some see the paycheck delay as adding insult to injury. Making payroll is one of the basic obligations both public and private employers are expected to honor, and state government’s failure to keep its appointed rounds on time creates fear that other breaches of implied promise may lie ahead. In fact, additional delays of the end-of-year paychecks are already planned for the next two years.

Robbing Peter to pay Paul has become standard procedure since Gov. Steve Beshear declared a financial crisis at the beginning of his administration. With a $1.5 billion shortfall in the 2010-2012 budget, state legislators diverted $200 million from the Medicaid budget in the expectation that it would recover the money later from the federal government. But Washington had problems of its own and Frankfort got less Medicaid money than expected. So the state borrowed from future allocations to balance the 2011-2012 budget. Beshear hoped to recover the redistributed funds by making Medicaid run more efficiently through managed care – a proposition that’s still being tested.

Now state workers are having to resort to money management tricks not unlike those their employer has practiced. People who live from paycheck to paycheck don’t necessarily have the luxury of postponing payment of bills, although David Smith, the KASE president, said local businesses have been understanding. The Personnel Cabinet advised employees to work with their banks on scheduled payments. That’s fine if you have a cooperative banker, but not all money collectors are so forgiving. Credit card companies, especially, are notorious for insisting on strict adherence to payment deadlines; they exact stiff penalties against debtors who fail to comply.

Self-disciplined bill payers who signed up for automatic withdrawals from their checking accounts may wish they’d left themselves a little more flexibility. Those who rely on direct deposit to put their checks in the bank each payday could wake up to find their checking accounts overdrawn. Some may even have to borrow money they need over the weekend. Too bad employees can’t assess their own “late penalties” against employers.

The bright side is that state wage earners have reason to look forward to Monday for a change. They’ll be singing the payday weekend blues in the meantime.

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