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South Dakota Payday Lending Initiative, Initiated Measure 21 (2016)
| South Dakota Measure 21 | |
|---|---|
 | |
| Election date November 8, 2016 | |
| Topic Banking | |
Status Approved | |
| Type State statute | Origin Citizens |
The South Dakota Payday Lending Initiative, also known as Initiated Measure 21, was on the November 8, 2016, ballot in South Dakota as an initiated state statute. It was approved.[1][2]
| A "yes" vote was a vote in favor of placing an interest rate cap of 36 percent on short-term loans. |
| A "no" vote was a vote against placing an interest rate cap of 36 percent on short-term loans. |
Election results
| Measure 21 | ||||
|---|---|---|---|---|
| Result | Votes | Percentage | ||
| Yes | 270,312 | 75.58% | ||
| No | 87,355 | 24.42% | ||
- Election results from South Dakota Secretary of State
Overview
Initiative design
Measure 21 was designed to cap the interest rate that could be charged by money lenders licensed under South Dakota Codified Laws chapter 54-4. These money lenders would not be able to charge an interest rate of more than 36 percent on their loans. The measure classified charging more than the limit as a Class 1 misdemeanor crime, and loans made without adhering to the cap rate would be voided.
Which lenders would this measure not apply to?
According to the South Dakota Attorney General, the 36 percent interest rate cap would not apply to the following lenders:
- State and national banks
- Bank holding companies
- Other federally insured financial institutions
- State chartered trust companies
- Businesses that provide financing for goods and services that they sell
Relationship between Measure 21 and Amendment U
Measure 21 placed an interest rate cap of 36 percent on short-term loans, while Amendment U would have limited the ability to set statutory interest rates but placed a cap of 18 percent in certain circumstances, had it passed. The top donor for the Measure 21 support campaign, Center for Responsible Lending, was also the top donor for Amendment U's opposition campaign. South Dakota law was not designed with provisions relating to procedures for competing initiatives that are both approved by voters, but Amendment U was designed to eliminate any statutory interest rate settings not adhering to its provisions if passed.
State of the ballot measure campaigns
For Measure 21, the opposition campaign raised more than 15 times the amount that the support campaign raised. Opponents received $1.4 million, while supporters raised $86,799.[3]
Text of measure
Ballot question
The question that appeared on the ballot was as follows:[4]
| “ |
A vote "Yes" is for prohibiting certain money lenders from charging more than 36% interest on loans. A vote "No" is against the measure. [5] |
” |
Attorney general's explanation
The following was the attorney general's ballot explanation:[6]
| “ | The initiated measure prohibits certain State-licensed money lenders from making a loan that imposes total interest, fees and charges at an annual percentage rate greater than 36%. The measure also prohibits these money lenders from evading this rate limitation by indirect means. A violation of this measure is a misdemeanor crime. In addition, a loan made in violation of this measure is void, and any principal, fee, interest, or charge is uncollectable.
The measure's prohibitions apply to all money lenders licensed under South Dakota Codified Laws chapter 54-4. These licensed lenders make commercial and personal loans, including installment, automobile, short-term consumer, payday, and title loans. The measure does not apply to state and national banks, bank holding companies, other federally insured financial institutions, and state chartered trust companies. The measure also does not apply to businesses that provide financing for goods and services they sell. A vote “Yes” is for prohibiting certain money lenders from charging more than 36% interest on loans. A vote “No” is against the measure. [5] |
” |
Full text
The full text of the measure is as follows:[7]
|
Support
Rep. Steve Hickey (R-9) and Steve Hildebrand, an organizer for the Democratic Party, teamed up to support this measure by creating the campaign group South Dakotans for Responsible Lending.[1][2]
Arguments in favor
Steve Hildebrand, the measure's sponsor, said,[8]
| “ | We know a large majority of South Dakotans want to stop the abuse from payday lenders and now we just have to understand that get people to understand initiated measure 21 is the one to vote for.[5] | ” |
Official argument in favor
The official argument in favor of this measure as listed in the "South Dakota 2016 Ballot Question Pamphlet" was as follows:[9]
| “ |
We are encouraging South Dakotans who believe we should cap interest rates on payday loans and car-title loans at 36% to vote YES on Initiated Measure 21. Currently, there is NO cap on interest rates. Lenders can and do charge whatever high rates they want to. Today, the average payday loan in South Dakota charges low-income people 574%. We can do better. Predatory lenders should not be able to charge more than 36% interest – a rate set by the federal government for members of the military. Capping interest rates at 36% on payday loans is supported by all major religious denominations, AARP and other organizations that work to protect low-income families and seniors in South Dakota. By Steve Hickey, Co-Chair of South Dakotans for Responsible Lending [5] |
” |
Opposition
Arguments against
John Tsitriano, businessman in Rapid City, wrote in the Rapid City Journal,[10]
| “ | My biggest concern with the proposed ballot issue is that by capping the interest rate these lenders can charge at 36 percent, the measure will cause the industry to disappear. No doubt a lot of people are cheering this one on. But are they considering the outcomes?
A 2011 study on the effects of regulating the payday lending industry by the University of Washington concludes that, "household financial security does not necessarily improve after payday lending is prohibited through rate and fee ceilings of less than 36 percent," and that "without access to payday loans, consumers likely use overdrafts, pawnshop loans, and late bill payment to cover short run credit needs." In other words, the absence of payday lenders causes consumers to jump out of one frying pan and into another fire. My bank charges $39 per overdraft. You can annualize that for yourself, but if the bounced check is on a typical household bill of a few hundred bucks or less, I'd say conventional bankers will see a windfall if Initiative 21 passes. The same goes for pawnshops and entities like credit cards that stick consumers with late fees.[5] |
” |
Official argument against
The official argument against this measure as listed in the "South Dakota 2016 Ballot Question Pamphlet" was as follows:[9]
| “ |
Vote “No” on Initiated Measure 21 If passed, Initiated Measure 21 will:
This measure claims to cap short-term lending at a 36% interest rate, but do not be fooled. If gas prices were capped at 36 cents per gallon, it would mean you would have no gas. This measure will end short-term lending in South Dakota, preventing hardworking South Dakotans from obtaining emergency loans when they most need them and killing the jobs that so many South Dakotan families need. Brad Thuringer, Chair of Give Us Credit South Dakota [5] |
” |
Campaign finance
As of February 8, 2017, the campaign in support of Measure 21 featured two ballot question committees, South Dakotans for Responsible Lending and Yes on 21, that received a total of $86,798.94 in contributions. The support campaign spent $86,798.49.[3]
The campaign in opposition to Measure 21 featured two ballot question committees, Give Us Credit South Dakota and Credit for South Dakotans, that raised a total of $1,362,364.52 in contributions. The opposition campaign spent $1,360,068.60.[3]
The top donor in support of Measure 21, the Center for Responsible Lending, provided 30 percent of the campaign's total funds. The center contributed $21,268.93. Select Management Resources LLC contributed 94 percent of the opposition's total funds, contributing $1,285,602.22.[3]
| Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures | |
|---|---|---|---|---|---|
| Support | $69,783.10 | $17,015.84 | $86,798.94 | $69,782.65 | $86,798.49 |
| Oppose | $1,362,364.52 | $0.00 | $1,362,364.52 | $1,360,068.60 | $1,360,068.60 |
| Total | $1,432,147.62 | $17,015.84 | $1,449,163.46 | $1,429,851.25 | $1,446,867.09 |
Support
The following table includes contribution and expenditure totals for the committees in support of the measure.[3]
| Committees in support of Initiated Measure 21 | |||||
|---|---|---|---|---|---|
| Committee | Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures |
| South Dakotans for Responsible Lending | $69,172.65 | $15,398.43 | $84,571.08 | $69,172.65 | $84,571.08 |
| Yes on 21 | $610.45 | $1,617.41 | $2,227.86 | $610.00 | $2,227.41 |
| Total | $69,783.10 | $17,015.84 | $86,798.94 | $69,782.65 | $86,798.49 |
Donors
The following were the top donors to the committee.[3]
| Donor | Cash Contributions | In-Kind Contributions | Total Contributions |
|---|---|---|---|
| Center for Responsible Lending | $10,500.00 | $10,768.93 | $21,268.93 |
| Sixteen Thirty Fund | $9,800.00 | $0.00 | $9,800.00 |
| David H. Billion | $5,000.00 | $0.00 | $5,000.00 |
| Steve and Kristen Hick | $5,000.00 | $0.00 | $5,000.00 |
| Nichols Media | $0.00 | $3,891.00 | $3,891.00 |
Opposition
The following table includes contribution and expenditure totals for the committees in opposition to the initiative.[3]
| Committees in opposition to Initiated Measure 21 | |||||
|---|---|---|---|---|---|
| Committee | Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures |
| Give Us Credit South Dakota | $1,285,702.22 | $0.00 | $1,285,702.22 | $1,283,406.30 | $1,283,406.30 |
| Credit for South Dakotans | $76,662.30 | $0.00 | $76,662.30 | $76,662.30 | $76,662.30 |
| Total | $1,362,364.52 | $0.00 | $1,362,364.52 | $1,360,068.60 | $1,360,068.60 |
Donors
The following were the top donors to the committee.[3]
| Donor | Cash Contributions | In-Kind Contributions | Total Contributions |
|---|---|---|---|
| Select Management Resources | $1,285,602.22 | $0.00 | $1,285,602.22 |
| Advance America, Cash Advance Centers of South Dakota, Inc. | $76,612.30 | $0.00 | $76,612.30 |
Methodology
To read Ballotpedia's methodology for covering ballot measure campaign finance information, click here.
Path to the ballot
The required number of valid signatures is tied to the number of votes cast for the office of the governor of South Dakota in the most recent gubernatorial election. Since the initiative is proposed for 2016, the number of required signatures reflected the votes cast in the 2014 gubernatorial election.
Supporters needed to collect 13,870 signatures by the November 9, 2015, deadline. Sponsors of the petition submitted 19,936 signatures. Only 86.4 percent of the signatures were deemed valid, but the valid 17,222 signatures were enough to place the measure on the ballot. The secretary of state's office certified the measure on December 28, 2015.[11]
Cost of signature collection:
Ballotpedia found no petition companies that received payment from the sponsors of this measure, which means signatures were likely gathered largely by volunteers. A total of $0 was spent to collect the 13,870 valid signatures required to put this measure before voters, resulting in a total cost per required signature (CPRS) of $0.[12]
Legal challenge
There are numerous challenges to this measure.
Aaron Lorenzen, former Faulk County auditor, filed a challenge saying that over 7,000 signatures should be discarded. The challenge claims that nearly 2,280 signatures were from unregistered voters, that hundreds of others had incomplete addresses, illegible names, or missing dates, and that almost 3,000 signatures had errors made by circulators. Lorenzon said that he compared the signature names with those in the South Dakota Voter Registration file.[11] The lawsuit was unsuccessful, as the court could not identify sufficient invalid signatures to stop the measure.[13]
A second challenge was filed by Craig Olson, who said that petition sponsors Steve Hickey and Reynold Nesiba do not live at the addresses they listed as circulators of petitions. Hickey allegedly lived in Scotland during the time of the petition drive.[11]
A third challenge was filed by lawyers from Rapid City and Kansas City, Missouri, on behalf of Erin Ageton. They argue that state Attorney General Marty Jackley left out of his ballot explanation the following words: "The initiated measure, if adopted, will eliminate short-term loans in South Dakota."[14] That he omitted this phrase raises the possibility that petition signers were not adequately informed of its purpose.[14]
In mid-February 2016, the South Dakota Supreme Court heard oral arguments concerning the issue of the ballot explanation. The court considered whether to uphold or overturn the appeal of a circuit judge's ruling on the issue. This ruling upheld Attorney General Jackley's explanation of the initiative.[15]
On March 31, 2016, the South Dakota Supreme Court upheld the appeal, which sought to have the initiative rejected because of alleged misleading language. Erin Ageton, vice president of Select Management Resources, a payday lender, and plaintiff in the suit, said that proposal was meant to drive lenders out of business. South Dakotans for Responsible Lending said that predatory lending was a serious problem where lenders would charge over 500 percent.[16]
Supreme Court Judge Lori Wilbur wrote in the decision:[16]
| “ | even if we accept that the proponent's true purpose with the initiated measure is to end short-term lending in South Dakota, that purpose and effect is more appropriate for political dispute and advocacy. There is no language in the initiated measure that specifically bans short-term lending in South Dakota. And, although a 36 percent interest rate cap on short-term loans for certain lenders might prompt those lenders to cease providing short-term loans, the initiated measure does not prohibit their continued operation.[5] | ” |
Wilbur also wrote that initiatives can have numerous and unidentified effects, and the attorney general is not responsible to predict them. She said,[16]
| “ | It is simply not for this Court or the circuit court to require the Attorney General to include every practical or possible effect of each initiated measure. ... From our review of the Attorney General's ballot explanation, the Attorney General did not abuse his discretion, and the explanation is adequate.[5] | ” |
Attorney General Marty Jackley reacted to the decision, saying:[16]
| “ | Pursuant to South Dakota law, I have worked to provide a fair, clear, and simple summary of the proposed measure in order to assist our voters. I am pleased the Court has reaffirmed the fairness of my Attorney General Explanation.[5] | ” |
Alan Simpson, attorney for plaintiff Erin Ageton, said,[16]
| “ | The court's decision recognizes that the attorney general had a duty to educate the public, and that this petition may well be a disguised effort to shut down short-term lending.[5] | ” |
State profile
| Demographic data for South Dakota | ||
|---|---|---|
| South Dakota | U.S. | |
| Total population: | 857,919 | 316,515,021 |
| Land area (sq mi): | 75,811 | 3,531,905 |
| Race and ethnicity** | ||
| White: | 85% | 73.6% |
| Black/African American: | 1.6% | 12.6% |
| Asian: | 1.2% | 5.1% |
| Native American: | 8.6% | 0.8% |
| Pacific Islander: | 0% | 0.2% |
| Two or more: | 2.6% | 3% |
| Hispanic/Latino: | 3.3% | 17.1% |
| Education | ||
| High school graduation rate: | 90.9% | 86.7% |
| College graduation rate: | 27% | 29.8% |
| Income | ||
| Median household income: | $50,957 | $53,889 |
| Persons below poverty level: | 15.3% | 11.3% |
| Source: U.S. Census Bureau, "American Community Survey" (5-year estimates 2010-2015) Click here for more information on the 2020 census and here for more on its impact on the redistricting process in South Dakota. **Note: Percentages for race and ethnicity may add up to more than 100 percent because respondents may report more than one race and the Hispanic/Latino ethnicity may be selected in conjunction with any race. Read more about race and ethnicity in the census here. | ||
Presidential voting pattern
South Dakota voted Republican in all seven presidential elections between 2000 and 2024.
Pivot Counties (2016)
Ballotpedia identified 206 counties that voted for Donald Trump (R) in 2016 after voting for Barack Obama (D) in 2008 and 2012. Collectively, Trump won these Pivot Counties by more than 580,000 votes. Of these 206 counties, five are located in South Dakota, accounting for 2.43 percent of the total pivot counties.[17]
Pivot Counties (2020)
In 2020, Ballotpedia re-examined the 206 Pivot Counties to view their voting patterns following that year's presidential election. Ballotpedia defined those won by Trump won as Retained Pivot Counties and those won by Joe Biden (D) as Boomerang Pivot Counties. Nationwide, there were 181 Retained Pivot Counties and 25 Boomerang Pivot Counties. South Dakota had four Retained Pivot Counties and one Boomerang Pivot County, accounting for 2.21 and 4.00 percent of all Retained and Boomerang Pivot Counties, respectively.
More South Dakota coverage on Ballotpedia
- Elections in South Dakota
- United States congressional delegations from South Dakota
- Public policy in South Dakota
- Endorsers in South Dakota
- South Dakota fact checks
- More...
See also
External links
Sponsor contact information
- Steve Hildebrand - 834 S. Phillips Ave, Sioux Falls, SD 57104
- Steve Hickey - 4501 N. Ellis Road, Sioux Falls, SD 57107
- Reynold Nesiba - 201 S Menlo Ave, Sioux Falls, SD 57104
Footnotes
- ↑ 1.0 1.1 The Argus Leader, "Payday loans could cease in South Dakota," December 14, 2014
- ↑ 2.0 2.1 The Washington Post, "Bipartisan team aims to curb South Dakota's payday lending industry," December 15, 2014
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 South Dakota Secretary of State, "Campaign Finance Statement," accessed November 4, 2016
- ↑ South Dakota Secretary of State, "Yes/No Recitations," accessed August 5, 2016
- ↑ 5.00 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5.10 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ South Dakota Secretary of State, "Attorney General's Explanation for IM 21," June 8, 2016
- ↑ South Dakota Secretary of State, "Initiative Petition," accessed December 29, 2015
- ↑ The Argus Leader, "Measure to cap interest rates for payday lenders to appear on 2016 ballot," December 28, 2015
- ↑ 9.0 9.1 South Dakota Secretary of State, "South Dakota 2016 Ballot Question Pamphlet," accessed August 18, 2016
- ↑ Rapid City Journal, "TSITRIAN: Payday limits could kill industry," June 22, 2016
- ↑ 11.0 11.1 11.2 Argus Leader, "High-interest rate cap petition challenged," accessed February 16, 2016
- ↑ South Dakota Secretary of State Campaign Finance Reporting System, "South Dakotans for Responsible Lending," accessed September 22, 2016
- ↑ KDLT News, "Secretary of State: Payday loan amendment challenge fails," May 19, 2016
- ↑ 14.0 14.1 Daily Republic, "Supreme Court is next arena for battle on payday lending," January 30, 2016
- ↑ The Daily Republic, "SD high court mulls lending ballot measure explanation case," February 16, 2016
- ↑ 16.0 16.1 16.2 16.3 16.4 Courthouse News Service, "Payday lending cap will go to S.D. voters," April 4, 2016
- ↑ The raw data for this study was provided by Dave Leip of Atlas of U.S. Presidential Elections.
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