SIOUX FALLS, S.D. (AP) - South Dakota residents may face a confusing scenario at the polls in November: a ballot with two proposals about payday loan interest rates that could have divergent consequences for borrowers and businesses across the state.
Secretary of State Shantel Krebs said Tuesday that a challenge to one ballot measure limiting interest rates to 36 percent annually was unsuccessful, paving its way to voters in the 2016 election unless a court challenge is filed. She said last week that a challenge to an industry-backed constitutional amendment had also failed, meaning it’s likely to appear on the ballot.
The efforts didn’t identify enough invalid signatures to disqualify the proposals from appearing before voters. A challenger of the 36 percent rate cap didn’t immediately return a telephone message requesting comment.
Payday lending opponents view the constitutional amendment as an attempt to insert a loophole allowing unlimited interest rates into the state constitution. The measure would cap interest rates at 18 percent annually unless the borrower agreed to a higher rate in writing.
The amendment is intended to sow confusion among voters and to provide protections for short-term lenders, said Steve Hildebrand, who is helping lead the push for the 36 percent proposal, which he believes the payday lending industry will challenge in court.
“We anticipate them to challenge everything we do,” he said. “They’ve got unlimited amounts of money because they steal it from poor people, and at that point, they’re going to do everything they can to protect their profits.”
There’s already been a legal tussle in the campaign. A title loan company official unsuccessfully argued in court that Attorney General Marty Jackley’s explanation of the 36 percent ballot measure doesn’t adequately inform voters of the proposal’s consequences.
Attorneys for Erin Ageton, an opponent of the initiative and an employee of a Georgia-based car title lender that has pumped more than $1.7 million into the constitutional amendment campaign, argued that the explanation doesn’t make clear that the proposal would drive the industry from South Dakota because the cap would prevent lenders from recouping the costs of providing loans.
Constitutional amendment sponsor Lisa Furlong, who has largely avoided speaking publicly about the campaign, said in a statement last week that it’s “great news” Krebs upheld the will of South Dakotans who support the measure.
“The support for our cause of ending high-interest rate loans, while defending free market principles continues to grow and we are glad that South Dakotans will have the opportunity to voice their support once more when they go to the polls this November,” she said.
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