Missouri Payday Loan Initiative (2012)
|Not on Ballot|
| This measure did not or |
will not appear on a ballot
The proposed measure was sponsored by a group called Missourian's for Responsible Living.
A total of 3 initiative petitions were approved for petition circulation.
- 1 Text of measure
- 2 Background
- 3 Support
- 4 Opposition
- 5 Lawsuits
- 6 Path to the ballot
- 7 See also
- 8 External links
- 9 Additional reading
- 10 References
Text of measure
The ballot title for the petition read:
Shall Missouri law be amended to limit the annual rate of interest, fees, and finance charges for payday, title, installment, and consumer credit loans, unless the parties agree otherwise in writing, and prohibit such lenders from using other transactions to avoid the rate limit?
The proposal is estimated to result in no direct costs or savings to state and local governmental entities.
Payday loans were generally a low, single payment loan that customers repaid when their next paycheck was received. According to reports, loan amounts usually ranged from $100-$500.
The Missouri Division of Finance reported that in 2010 there were an estimated 1,040 payday loan stores and 2.43 million payday loans in the state of Missouri.
A 2007 study by the state division found that of 3,700 borrowers, the average age was 43 and the average income was about $24,000.
The measure was supported by religious groups and civic organizations according to news reports. The PAC in support of the measure was called Missourians for Responsible Lending. According to news reports, the PAC raised $50,000 and spent $10,000.
Tactics and strategies
On January 28, 2012 Missourians for Responsible Lending and Give Missourians A Raise, a group circulating petitions for a 2012 initiative to increase the state's minimum wage, kicked off the two initiative petition campaigns at a joint event at the Boone County Commission Chambers.
- The measure was opposed by a Kansas City nonprofit called Missourians for Responsible Government. According to news reports, the group has contributed $600,000 to a committee in opposition of the measure.
- Missourians for Equal Credit Opportunity was also against the initiative.
- Stand Up Missouri, a nonpartisan coalition which represented consumers, businesses, civic groups, and faith-based organizations, launched a campaign effort in opposition of the proposed initiative on December 7, 2011. "Missourians are being asked to sign a petition for a ballot initiative that would cap lending rates. While the initiative is being reported as an effort to protect consumers from payday loans, it would actually restrict access to all small loans, including beneficial traditional consumer installment loans. These traditional loans help individuals and families get access to safe and transparent credit in a way that enables them to preserve their financial security," said Tom Hudgins, CEO and Chairman of Stand Up Missouri.
- Missouri Governor Jay Nixon opposed the initiative, stating: "The bottom line is I don't support raising taxes on groceries and other critical things that families need. Making families pay more for bread and milk doesn't seem like a solid step forward for our economy.”
|2012 measure lawsuits|
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|By lawsuit type|
|Ballot text |
Motivation of sponsors
John Prentzler v. Missouri Secretary of State, et al.
A lawsuit was filed on August 18, 2011 in Cole County Circuit Court. The lawsuit argued that the ballot summary was "inadequate and unfair." Additionally, the suit noted that the cost estimate did not address all possible costs.
The plaintiff was John Prentzler, director of auto operations at AutoStart USA. Prentzler was represented by Kansas City attorney Todd Graves and Jefferson City attorney Chuck Hatfield.
Specifically, the lawsuit highlighted that the lengthier fiscal note attached to the measure outlined a gloomier economic impact than what was outlined in the ballot language. State estimates said that the measure could have cost the state between $2.5 - $3.5 million, however, plaintiffs pointed to a report by a University of Missouri economics professor and former director of the Show-Me Institute that argued that the impact could have been approximately $57 million in the first year had the measure been approved.
A second lawsuit was filed on August 19, 2011 in Cole County Circuit Court. Contrary to the lawsuit filed by critics of the measure, the second lawsuit was filed by proponents. They argued that the fiscal note ignored testimony by state and local agencies that found that the proposed measure would have had no cost on their budgets. Additionally, the suit noted that the fiscal note relied on the expertise of a someone who has testified against the regulations in the past.
On April 5, 2012 Judge Dan Green ruled that the ballot summary and financial estimate for the initiative were "inadequate" and "unfair" and "likely to deceive petition signers." Specifically, Green noted that the summary, prepared by the Missouri Secretary of State's office, should have include that the measure would limit annualized interest rates to 36 percent on short-term loans. Additionally, the fiscal note, Green said, underestimated the potential loss of tax revenues. The fiscal note was prepared by the Missouri Auditor's office.
In response to the ruling, supporters said that they planned to continue collecting petition signatures.
Groups in support of both the Payday Loan Initiative and the Minimum Wage Initiative filed lawsuits in Cole County claiming that a number of valid petition signatures were not counted following the disqualification of petitions. The lawsuits followed the state's findings that the petitions for the measures contained an insufficient number of valid names.
Path to the ballot
- See also: Missouri signature requirements
To qualify for the ballot, the initiative required signatures from registered voters equal to 5% of the total votes cast in the 2008 governor's election from six of the state's nine congressional districts. Signatures on behalf of all initiative petitions for the 2012 ballot were due to the secretary of state’s office by no later than 5 p.m. on May 6, 2012.
Initiative process questioned
Legal challenges lead to bigger implications surrounding the state initiative process. On February 28, Cole County Circuit Court Judge Jon Beetum struck down a law that directed the state auditor to prepare fiscal analysis for proposed ballot initiatives.
According to reports, Beetem stated that the law was in violation of the Missouri Constitution. Specifically, the ruling stated that the 1997 statute conflicts with a constitutional provision that prohibits laws mandating the state auditor to perform duties unrelated to overseeing the spending and receiving of public money.
What was originally a challenge to a tobacco tax initiative has now grown into a statewide confusion of the initiative process. Events in the state took another twist leading up to the week of April 23, 2012 when Missouri Auditor Tom Schweich told his staff via e-mail to cease preparation of financial estimates of initiatives, directly because of the court ruling.
Ballot initiatives must have the official financial summary included with submitted petition signatures.
Although that ruling was overturned by a Missouri Supreme Court ruling, the measure did not have enough signatures to be placed on the ballot.
- Filed initiatives:
- Statutory Amendment to RSMo Chapters 367 and 408, Relating to Payday, Title, Installment, and Consumer Credit Loans, version 3 2012-066
- Statutory Amendment to RSMo Chapters 367 and 408, Relating to Payday, Title, Installment, and Consumer Credit Loans 2012-120
- Statutory Amendment to RSMo Chapters 367 and 408, Relating to Payday, Title, Installment, and Consumer Credit Loans, version 2 2012-121
- St. Louis Post-Dispatch, "Letters warn against petitions on payday loan fee issue," January 22, 2012
- News-Leader, "Payday loan petition not what public would think," January 13, 2012
- The Kansas City Star, "The Star’s editorial | Scandalous payday loan rates prompt petitions," August 14, 2011 (dead link)
- OzarksFirst.com, "Ballot Initiative Could Cap Payday Loan Rates at 36 Percent," August 11, 2011 (dead link)
- Missouri Secretary of State, "Two Initiative Petitions Approved for Circulation for 2012 Ballot," February 1, 2012
- St. Louis Post-Dispatch, "Payday loan initiative petition moves forward," August 10, 2011
- The Seattle Post-Dispatch, "Battle looming over Missouri payday loan restrictions," November 25, 2011
- Associated Press, "Mo. groups focus on payday loans, minimum wage," January 29, 2012 (dead link)
- Stand Up Missouri, "Stand Up Missouri Coalition Launches to Rally Against State Payday Loan Ballot Initiative," December 7, 2011
- Kansas City.com, "Supporters of Missouri sales tax plan committed to November vote," February 9, 2012 (dead link)
- Associated Press, "Legal challenge filed over Mo. ballot measure," August 21, 2011 (dead link)
- Columbia Daily Tribune, "Payday loan initiative faces challenge," August 19, 2011
- St. Louis Post-Dispatch, "Two lawsuits filed over Missouri payday loan ballot measure," August 22, 2011
- Associated Press, "Missouri judge strikes down payday loan initiative," April 5, 2012
- Loan Safe, "Missouri’s Appeal Aims to Preserve Initiative to Cap Payday Loan Interest," April 12, 2012
- Columbia Missourian, "Missouri cigarette tax, police initiatives qualify for November ballot," August 7, 2012
- Associated Press, "Lawsuits filed over 2 Missouri ballot measures," August 17, 2012
- Missouri Secretary of State, "Initiative Petition Relating to Payday, Title, Installment, and Consumer Credit Loans Approved for Circulation for 2012 Ballot," August 9, 2011
- Yahoo News, "Petitions submitted for Mo. tobacco tax increase," May 4, 2012
- Columbia Tribune, "Initiative organizers optimistic issues will get on ballot," May 2, 2012
- Midwest Democracy, "Missouri auditor halts financial estimates for ballot initiatives," April 23, 2012