Missouri Payday Loan Initiative (2012)
|Not on ballot|
The proposed measure is sponsored by a group called Missourian's for Responsible Living.
A total of 3 initiative petitions have been approved for petition circulation.
Text of measure
The ballot title for the petition reads:
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 are generally a low, single payment loan that customers repay when their next paycheck is received. According to reports, loan amounts usually range from $100-$500.
The Missouri Division of Finance reports 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 is supported by religious groups and civic organizations according to news reports. The PAC in support of the measure is called Missourians for Responsible Lending. According to news reports, the PAC has 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 is 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 is also against the initiative.
- Stand Up Missouri, a non-partisan coalition which represents 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 opposes 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|
| Arizona • Arkansas • Colorado • Florida • Maryland |
Michigan • Massachusetts • Minnesota
Missouri • Montana • Nevada
North Dakota • Ohio • Oklahoma
Oregon • Rhode Island
|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 argues that the ballot summary is "inadequate and unfair." Additionally, the suit notes that the cost estimate does not address all possible costs.
According to reports, the plaintiff is John Prentzler, director of auto operations at AutoStart USA. Prentzler is represented by Kansas City attorney Todd Graves and Jefferson City attorney Chuck Hatfield.
Specifically the lawsuit highlights that the lengthier fiscal note attached the the measure outlines a gloomier economic impact than what is outlined in the ballot language. State estimates say that the measure could cost the state between $2.5 - $3.5 million, however, plaintiffs point to a report by a University of Missouri economics professor and former director of the Show-Me Institute that argues that the impact could be approximately $57 million in the first year should the measure be 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 argue that the fiscal note ignores testimony by state and local agencies that found that the proposed measure would have no cost on their budgets. Additionally, the suit notes that the fiscal note relies on the expertise of a someone who has testified against the regulations in the past.
On April 5, 2012 Cole County Circuit 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, underestimates 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.
Path to the ballot
- See also: Missouri signature requirements
To qualify for the ballot, the initiative requires 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 are due to the secretary of state’s office by no later than 5 p.m. on May 6, 2012.
Initiative process questioned
Legal challenges have lead to bigger implications surrounding the state initiative process. On February 28, Cole County Circuit Court Judge Jon Beetum struck down a law that directs 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, making it unclear as to what will happen to proposed 2012 initiatives for the time being.
- 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
- 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
- OzarksFirst.com,"Ballot Initiative Could Cap Payday Loan Rates at 36 Percent," August 11, 2011
- 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
- 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
- Associated Press,"Legal challenge filed over Mo. ballot measure," August 21, 2011
- 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
- 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