Monday, April 7, 2014

Monday, April 7, 2014

Payday lending debate moves to House committee; Gov. Bobby Jindal orders state spending “freeze”; Stephanie Grace: Revenues will be a top topic in 2015 and beyond; Executive budget includes $900 million in questionable financing ; and Laginappe. 3,126,278 – Number of payday loans issued in Louisiana in 2013. (Source: Office of Financial Institutions)

Payday lending debate moves to House committee
The ongoing effort to rein in predatory payday lending moves to the House Commerce Committee this morning, where Rep. Ted James, D-Baton Rouge, is scheduled to present his House Bill 239 for debate. Like a similar measure by Sen. Ben Nevers that was heard last week in the Senate (and heavily amended), James’ bill would cap the annual interest rates that lenders are allowed to charge at 36 percent. Borrowers currently can be charged APRs as high as 700 percent on short-term loans that often end up trapping users in a cycle of debt that can be tough to escape.

Adding fuel to the debate is a new report by the Office of Financial Institutions, which regulates payday lenders. The report, released quietly last week, found that Louisianans took out more than 3.1 million payday loans in 2013 and paid over $145 million in fees. The industry also collected more than $2 million in additional fees associated with 154,000 bounced checks by people who defaulted on their loans. An economic impact analysis of the report by Together Louisiana estimates that payday lending drained $42 million from the state’s economy last year that resulted in a loss of 614 jobs.

Gov. Bobby Jindal orders state spending “freeze”
Chances are pretty good that you missed the announcement sent out by the governor’s office at 6:30 p.m. on Friday – a time traditionally reserved for releasing bad news – that state spending has been “frozen” for the remainder of the fiscal year. Administration officials described the freeze as a standard precaution, and the main effects will be to curb discretionary travel and spending on things like office equipment and repairs by executive-branch agencies. While such freezes were common during the depths of the Great Recession, the latest version is sure to provide fresh fodder to the justifiable complaints that the state’s recent spate of new job announcements has failed to produce positive returns for state revenues.

Stephanie Grace: Revenues will be a top topic in 2015 and beyond
While Gov. Bobby Jindal seems increasingly focused on his presidential aspirations, the political attention in Louisiana is turning to the next governor and the issues that he or she will confront. The Advocate’s Stephanie Grace notes in her Sunday column that the major issues affecting state revenue – including TOPS and Medicaid expansion – will be waiting for the next chief executive. “It means a fresh look at whether the state can really afford to reject the Medicaid expansion that is part of President Barack Obama’s Affordable Care Act. Jindal, of course, has positioned himself as a staunch ACA critic and argued that Louisiana should forego three fully paid years and 90 percent federal financing beyond that because the state can’t afford the future 10 percent share. Ask around the Capitol and the public health community, though, and you’ll hear plenty of people quietly acknowledge that Louisiana can’t afford not to.

“It also means real debate over how to rein in the runaway cost of the popular TOPS college scholarship program, whether new restrictions are based on merit, need, willingness of students to stay in Louisiana or other factors. Jindal also put his foot down on any changes to TOPS on his watch, but many insiders agree the hugely popular entitlement is simply not sustainable.”

Executive budget includes $900 million in questionable financing
As the House Appropriations Committee nears the end of its annual review of the executive budget, the AP’s Melinda Deslatte provides a helpful inventory of legislative complaints. As in previous years, legislators are not happy with Gov. Bobby Jindal’s reliance on one-time dollars and other questionable financing mechanisms, such as borrowing money from the New Orleans Convention Center and raiding various funds set aside for specific uses. But with revenue increases off the table in this non-fiscal session, readers are reminded that the budget battle is a zero-sum game: “If lawmakers in the House want to rework the budget, however, they’d have to find places to cut. That’s always a difficult proposition — and it becomes trickier as the 2015 legislative election year nears.

Among items that could be cut are pay raises for state workers and a new incentive fund for public colleges – money the administration characterizes as “new” spending but which is really a continuation of money colleges received this year.

It’s not until the very end of the column, however, that we are told just how many budget problems are being set aside for future legislators to deal with. “But then there are the concerns about later years, with estimates that Jindal’s budget uses as much as $900 million in short-term financing sources that won’t be on hand a year later. Rep. John Schroder, R-Covington, said the potential hole looks so big, ‘I almost wish I wasn’t coming back next year.’”

Laginappe
Leave it to the geniuses at The Onion to point out the absurdity of Louisiana’s film tax credit program.

3,126,278 – Number of payday loans issued in Louisiana in 2013. (Source: Office of Financial Institutions)