Local banks, credit unions still taking state IOUs

July 10, 2009

By Jondi Gumz - Santa Cruz Sentinel

Although some big banks plan to stop cashing state IOUs after today, locally owned banks and credit unions say they will continue to accept warrants.

That's a relief for Community Bridges, a local nonprofit that expects about $500,000 in state IOUs this month to operate Meals on Wheels and four child care centers.

"That represents about 15 percent of the total budget for those two programs," said Sam Storey, executive director of Community Bridges. "As each month passes without a state budget, that amount and the percentage will increase. Fortunately, two local banks, Santa Cruz County Bank and Lighthouse Bank, have let us know that they are willing to cash in the warrants."

This will allow the nonprofit to make payroll and keep those programs open.

Lighthouse Bank is accepting registered warrants on a case-by-case basis, according to spokeswoman Brianna Carabba. Currently there is no time limit on their acceptance.

Santa Cruz County Bank announced Thursday it will accept state warrants for existing bank customers through July 31.

"If a budget is not passed at that time, we will consider the option of further extension of our acceptance of warrants for our customers," said David Heald, the bank's president and chief executive officer. "We realize this situation places a tremendous hardship on those that rely on state dollars and we will do everything we can to support our customers."

Ginger McNally, chief executive officer at Santa Cruz Community Credit Union, said warrants will be accepted from existing credit union members.

This is "an important way to help members through these tough times," she said.

Bay Federal Credit Union also is accepting state IOUs from credit union members. "We will evaluate the impacts on an ongoing basis and will accept the warrants until further notice," said spokeswoman Tonee Picard.