Friday, June 12, 2015

Let's make that impartial ballot statement more impartial...yeah, that's it! (South Dakota short term loans, Erin Ageton, and Marty Jackley)

When we receive propositions in California, the material consists of several parts. Normally I only pay attention to two of them: the statement in which the opponents say that the proponents are full of it, and the statement in which the proponents say the opponents are full of it. I admit that I often skip over the impartial assessment of the effects of the measure.

However, in South Dakota, that impartial statement is becoming part of the ballot battleground.

In that state, an initiative is trying to qualify for the ballot that will cap loans from "certain State-licensed money lenders" at an annual percentage rate of 36%. If that rate sounds high to you, that's because the money lenders in question are the ones who provide short-term interest loans - payday loans and the like. If you hear a commercial on the radio that says "we'll lend you money" but doesn't actually quote the interest rate at which the money will be loaned, it's probably a loan that would be affected by South Dakota's proposed rate cap.

In South Dakota, the Attorney General (Marty Jackley) is responsible for coming up with the impartial ballot statements. Here's Jackley's statement for the loan cap initiative.

In California, such an initiate would include a statement on financial impacts, but only on the financial impacts to state and local governments. It would not comment on other financial effects, such as the value of outstanding loans held by South Dakota consumers, the effects of a rate change on these loans, or the effects of a rate change on South Dakota businesses. At least in California, we only care about the effects to government.

South Dakota includes no such requirement. According to the Attorney General, an initiative statement only needs to include the following:

Under South Dakota law, the Attorney General is responsible for preparing explanations for proposed initiated measures, referred laws, and South Dakota Constitutional Amendments. Specifically, the explanation includes a title, an objective, clear and simple summary of the purpose and effect of the proposed measure and a description of the legal consequences.

According to this statement, the Attorney General only needs to speak about the legal consequences - this is, after all, the Attorney General's office. The Attorney General is not charged with addressing financial consequences to governments, citizens, or businesses.

Erin Ageton believes that the Attorney General should be educating the public more. Ageton believes that the initiative explanation could be vastly improved by the addition of one simple sentence. In fact, Ageton has already drafted the sentence for the Attorney General's consideration:

The initiated measure, if adopted, will eliminate short-term loans in South Dakota.

Ageton has communicated this sentence to the Attorney General in the form of a legal action on behalf of the firm that employs her, Select Management Resources. And yes, that firm provides short-term loans, and believes that "[t]he measure's purpose, effect and legal consequence is to set a 'maximum' interest rate so low that this form of consumer credit will simply disappear." Ageton cites a 2011 University of Washington study that says, in part, "[t]he supply of payday loans significantly decreases when rates are capped at 36% or less." The study doesn't say that the supply of payday loans will decrease to zero, but perhaps I'm being overly picky.

In South Dakota terms:

Because South Dakota limits short-term loans to $500, Ageton said, a lender will earn just $6.90 on a loan paid off within 14 days. She says that is not enough to cover overhead.

Proponents of the measure note, however, that Ageton's figures assume that the loan is paid off within 14 days. Often, that does not happen.

If the Attorney General has accurately described his responsibilities regarding initiative statements - a big if, by the way - then my layman's view is that Select Management Resources' lawsuit will be thrown out, causing the company to go to the REAL source of power.

The people who create advertisements against ballot measures.

Heck, I'll write the first one.

Tommy is an honorably discharged military veteran, an elder in his church, and he loves cute puppies. His fine American car needed repairs one day, and he couldn't get to work without it. But he won't be paid for another week. How can he pay for this expense right now?

If the special interests have their way, Tommy won't be able to pay for that car repair. Therefore, Tommy will stay home, lose his job, go on welfare, and kill everyone in South Dakota in a mad rampage.

Why? Because the special interests wanted to eliminate the one way for Tommy to get short-term money for a small dollar amount!

The special interests hate America AND they hate cute puppies.

Don't let the special interests have their way!

I'll submit my bill for creative services to Ageton next week. Interest will accrue on the bill if it is not paid.

P.S. If anyone wants to write the commercial script for the proponents of the bill (both of whom are named "Steve"), have at it.

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