Legal fight for Missouri initiatives ends

JEFFERSON CITY — Supporters of initiatives to raise Missouri’s minimum wage and stiffen regulations on payday loans have given up their legal fight to get the measures on the November ballot.

Last month, Secretary of State Robin Carnahan announced that neither measure had attracted enough signatures to be placed on the ballot. The two groups that organized the petition drives — Missourians for Responsible Lending and Give Missourians a Raise — balked at the claim, saying a significant number of signatures were improperly invalidated. They had vowed to fight Carnahan’s decision.

But on Monday both groups conceded that the legal hurdles erected by “the payday lending industry, their allies and their lawyers” are too high to clear before the Sept. 21 deadline for finalizing the November ballot. While they still believe they collected enough signatures for the initiatives to be put before voters, they decided to drop their lawsuit challenging Carnahan’s ruling.

“We are sad to report that the payday industry and minimum wage opponents’ unprecedented legal challenges effectively disenfranchised thousands of Missourians,” said the Rev. Martin Rafanan, one of the campaign’s leaders. “It is another example of big-monied corporate interests displacing the people’s interests in the democratic process.”

Opponents of the payday lending ballot initiative released a statement Monday morning celebrating the measure’s demise. They argue that these short-term loans help borrowers cover emergency costs and that the industry’s interest rates are less expensive than bank overdraft fees or late bill payment penalties.

“The real winners today are the thousands of Missouri families who will continue to have access to valuable credit options,” said the group Missourians for Equal Credit Opportunity.

Over the course of a year, a Kansas City-based nonprofit founded by communications consultant Patrick Tuoey poured $2.3 million into a political committee fighting the payday loan measure. The legal challenges that tied up the initiatives in courts for the last year were funded with this money.

Initiative supporters suspect that a good chunk of that money came from QC Holdings Inc., a payday lender based in Overland Park that operates primarily under the Quik Cash name. The company reported to the Securities and Exchange Commission earlier this year that it has already spent “substantial amounts opposing the efforts to place this initiative on the ballot.”

But because Tuoey’s organization is a nonprofit, it is not required to disclose its donors.

A study released earlier this year by national campaign finance watchdog Public Campaign found that top Democratic and Republican elected officials in Missouri banked more than $1.6 million in campaign contributions from payday lenders and their lobbyists over the past decade.

By contrast, supporters of both measures spent a little more than $600,000 combined on the campaign, according to disclosure reports filed with the Missouri Ethics Commission.

In general, a payday loan is a low, single-payment loan — typically between $100 and $500 — that customers repay when they receive a paycheck. The average interest rate for a payday loan in Missouri is 431 percent annually.

Missouri has one of the highest densities of payday lending stores in the country, with more than five shops for every 10,000 households. Critics contend payday lenders profit by targeting low-income families and generating a cycle of debt that exacerbates economic hardship.

The payday lending initiative would have capped the interest rate and fees charged for these types of short term loans at 36 percent.

Missouri’s current minimum wage is $7.25 an hour. The wage initiative would have increased that rate to $8.25 per hour starting in 2013, with an annual cost-of-living adjustment in subsequent years. If the federal minimum wage were to increase above that, Missouri would have had to adopt the federal rate and apply cost-of-living adjustments to that.

According to the Bureau of Labor Statistics, 109,000 workers in Missouri were paid at or below the minimum wage in 2011.