The payday loan industry has traditionally fought in state legislatures for the right to do business. However, after being banned in 15 states, they tried a new tactic in 2008: the ballot box. In two states, Ohio and Arizona, the industry contributed heavily in support of ballot measures that would allow them to operate, with hopes of securing their survival in the state, despite outspending their opposition by 22 to 1.
A new study by the National Institute on Money in State Politics (FollowTheMoney.org) found that more than $37 million was contributed to support or oppose the measures. The report, “Lenders Couldn’t Buy Laws,” examines the contributions to Arizona’s Proposition 200 and Ohio’s Issue 5, on the ballots in 2008.
Several organizations supporting payday lenders’ interests were major donors to ballot measure campaigns in both states. Most notable was the Community Financial Services Association, which contributed 96 percent ($19.9 million) of the money supporting their interests in Ohio. The state affiliate, Arizona Community Financial Services Association, gave 99 percent ($14.67 million) of the proponents’ money in Arizona.
In Arizona, Proposition 200 would have eliminated the state’s sunset clause on payday loan interest rate exemptions, allowing the industry to operate indefinitely. Despite raising $14.8 million, industry interests were soundly defeated at the ballot box, where the measure received just 40 percent of the votes. By comparison, opponents of the measure raised $1 million, more than half of which came from the Civic Participation Campaign.
Payday lenders were thwarted at the ballot box in Ohio as well, when 64 percent of voters supported Issue 5, which severely limits payday lending practices in the state. Payday lenders contributed nearly $21 million to defeat the measure, outraising opponents by a 38-to-1 margin. Proponents of the measure raised $547,413. The top contributor in support of the measure was the Coalition for Homeless & Housing in Ohio, which gave $362,611.