Tuesday, April 1, 2014

Payday loan debate moves to the Senate

The first skirmish in the effort to protect borrowers from the harmful effects of payday loans occurred in the House Commerce Committee on Monday, where a bill by Chairman Erich Ponti passed with support from the payday industry. Ponti's House Bill 766 was rewritten with an amendment that gives borrowers a limited ability to repay their short-term loans over a full year if they can't make the payment. The bill mimics tactics that have been tried in many other states, and does nothing to prevent most borrowers from falling into a cycle of debt. "Andrew Muhl, advocacy director for AARP, said the bill fails to address the payday lending industry's 'exorbitant fees.' His organization wants a 36 percent cap on payday APR rates. 'The recession has hit older adults who live on a fixed income especially hard. Many have turned to payday lenders in order to pay for their utilities, medicines and groceries and now they are stuck in debt,' Muhl said."


The debate moves to the Senate Judiciary A Committee this morning, where Chairman Ben Nevers will hold the first hearing on his Senate Bill 84, which would cap payday APRs at 36 percent and has drawn heavy fire from a barrage of industry lobbyists. Read LBP's statement on Ponti's bill here, and learn more about payday lending here.

Gov. Bobby Jindal unveils broad anti-poverty agenda*

In an announcement that took even some of his closest aides by surprise, Gov. Bobby Jindal said Monday that he plans to spend his remaining months in office fighting for Louisiana's poorest citizens by expanding access to health care and education while pushing for higher wages. Jindal pledged to cut back on out-of-state travel and work with the Legislature to expand Medicaid, create a state minimum wage that grows with inflation and invest new dollars in education programs.

 

"I've looked at the numbers and realized that Louisiana can't cut its way to prosperity," Jindal said. "So I will call the Legislature into special session in June to consider a bold, strategic revenue package that will raise the dollars we need to truly invest in a prosperous future."

 

The governor's plan calls for raising the tax on tobacco, alcohol and gasoline while cutting Louisiana's out-of-control film subsidies and eliminating the two-year tax exemption on horizontal drilling. The money raised will expand child care assistance for low-income working families and need-based college scholarships while making a quality pre-k education available to every 4-year-old in Louisiana. The state's road construction backlog will finally be addressed in a meaningful way as part of a transportation plan that also expands public transit and provides commuter rail service between New Orleans and Baton Rouge, Jindal said.  

 

"Don't look so surprised, people," Jindal said. "I promised you bold leadership when you elected me."

 

Higher education fund clears first committee hurdle
Gov. Bobby Jindal's plan to create a new incentive fund to train workers for high-demand jobs cleared its first committee hurdle on Monday,
Nola.com reports. The Workforce Innovation for a Stronger Economy - or WISE - fund would get $40 million in the upcoming budget year, which colleges would have to match with contributions from industry. The money is not new funding, but rather a continuation of funding that was inserted into the current-year budget near the end of last year's session. And while there is little chance the Legislature will refuse to go along with the funding request, lawmakers continue to show impatience with the fact that the state's investments in business recruitment are not paying off in new tax revenues. "When can we expect to see some results? (The state's) bottom line hasn't increased much at all," [Appropriations Committee Chairman Jim] Fannin said of state tax revenue. "Give me a real timeline as to what this means about putting people to work."

 

This year's Ryan budget will be even more extreme than last year  

U.S. House Budget Committee Chairman Paul Ryan today will present a 10-year plan for balancing the federal budget that relies on deep cuts to popular social programs, Reuters reports. "Ryan has revealed no details of his plan, but Republican leaders in the House of Representatives have said it would achieve balance within 10 years, as Ryan's budget plan proposed last year. It is widely expected to contain many elements of his past budgets, including deep cuts to social safety net programs such as Medicaid health care for the poor and food stamps."

 

The Center on Budget and Policy Priorities did some basic arithmetic and concluded that the proposed cuts in this year's budget will be even harsher than in previous plans. "Last year, Ryan's budget focused its deepest cuts on programs that benefit low-income people. These cuts, which included massive reductions in Medicaid and SNAP (formerly food stamps) as well as the repeal of all health reform benefits, constituted about 72 percent of the budget's total program cuts. As a result, last year's budget would have resulted in large increases in poverty and deprived many millions of affordable health insurance. Further cuts in low-income programs are highly likely if the new Ryan budget again relies solely on program cuts while boosting defense funding and avoiding any cuts in Social Security and additional savings in Medicare."

 

*Check your calendar

22 -  The number of states, plus the District of Columbia, that either cap annual interest rates on payday loans at 36 percent or have other meaningful regulations on their books. Louisiana is not among them. (Source: Center for Responsible Lending).  

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