Louisiana has a high concentration of predatory payday lenders – more than 1,000 storefronts, chiefly located in or near low-income neighborhoods. New federal rules, set to take effect in August 2019, aim to rein in this industry by requiring lenders to verify that borrowers have the ability to repay their loans without getting caught in a cycle of debt that requires more loans. To circumvent these rules, the payday industry is backing new “installment loan” legislation in states around the country, which would create new high-interest loan products that have the same bad effects on vulnerable borrowers. LBP’s State Policy Fellow, Carmen Green, explains in a new policy brief:
The Louisiana Installment Loan Act (House Bill 501/Senate Bill 365) would expand the payday loan industry in Louisiana by allowing payday lenders and car title lenders to offer longer-term “installment loans.” Installment loans are similar to high-interest payday loans, but allow borrowers to take out larger loans for longer periods of time. The installment loans would not replace existing payday loans, but would be an entirely new product with high costs for consumers that create an even greater risk that borrowers will get caught in the predatory lending debt trap. Payday lenders in Louisiana currently make high-interest loans of $50 to $350 that must be repaid within 60 days. The proposed bills would also allow loans from $500 to $1,500, with repayment periods lasting from 6 months to 1 year. The Center for Responsible Lending calculates that a $500 loan, repayable over six months, would carry a 245 percent annual percentage rate (APR), when all fees are included. For a $1,000 loan due in 12 months, payday lenders would collect more than double what they lend.
Both bills are scheduled for their first committee hearings on Tuesday morning.
Nursing homes vs. community care
The decades-long political battle between Louisiana’s powerful nursing home industry and advocates for more community-based options for long-term care will be rejoined this week in the state Legislature. The Senate Health & Welfare Committee will hear a proposal by Sen. Conrad Appel that would put managed-care companies in charge of deciding whether elderly people with disabilities belong in a nursing home or in a more cost-effective setting such as home-based care. The Advocate’s Rebekah Allen:
Legislators from both the left and right say they are frustrated by the way the state’s system is heavily stacked toward nursing homes, when home-health programs are less expensive and widely preferred by senior citizens. Nursing homes receive 77 percent of the Medicaid budget designated for elderly and physically disabled, with home-based programs getting the rest. In most states, the rate is closer to 60-40. … There’s about 28,000 people on waiting lists across the state to receive home- and community-based care. Expanding the managed care population to include nursing homes means more private companies would be paying the state a 5½ percent managed care tax, which has been projected to generate between $100 million and $200 million a year.
The newspaper’s editorial board supports the proposed change, but says the bills face an uphill battle at the Capitol:
Over the last decade and a half, the (nursing home) industry and its allies have put nearly $6 million dollars into Louisiana political campaigns, a figure that reflects just the contributions that were recorded electronically, a requirement since 2010. Those contributions included about three quarters of a million dollars each to Gov. John Bel Edwards and his predecessor, Bobby Jindal.
Louisiana workers need a raise
Louisiana is one of only five states without a minimum wage law. We have the highest percentage of workers making the federal minimum wage of $7.25 an hour – money that isn’t even close to adequate for people with rent to pay or children to support. On Tuesday afternoon, the full state Senate will have an opportunity to vote on whether Louisiana should join the majority of states (29 plus D.C.) that have raised their minimum wage above the federal minimum. Senate Bill 162 by Sen. Troy Carter of New Orleans would raise the wage to $8.50 per hour by 2020, which would provide a pay raise for roughly 1 in 10 Louisiana workers. Advocate columnist/breakfast aficionado Ed Pratt looks at the effect of low pay:
Let’s do a little more figuring on this $7.25 minimum wage. If a person is a single parent with two children with a minimum wage job, they would have to work at least 50 hours a week to grab a life just at the poverty level. But, even with minimum wage, there are probably little if any health benefits. Because many Louisiana workers aren’t paid much, some of them have to seek welfare assistance in the form of the Supplemental Nutrition Assistance Program, or SNAP, for their children. At least that can help some of those low-income workers provide a little more food for their children. SNAP could be a goner if President Donald Trump gets his way. He wants to send poor people, probably like some of those missing restaurant workers, a box of government-prepared, non-perishable food every month instead of SNAP food stamps, which allows them to purchase meat, too. I don’t even want to think what will be in those boxes.
Momentum builds for ConCon
The state Legislature still has no plan for resolving Louisiana’s $700 million-plus “fiscal cliff,” but a growing number of lawmakers appear convinced that the state’s long-term structural budget problems won’t be fixed without an overhaul of the state constitution. The AP’s Melinda Deslatte reports that while calls for a constitutional convention aren’t new – and have failed numerous times in the past – the idea keeps gaining new adherents.
The convention legislation seems unlikely to make it through both the House and Senate this year amid competing visions of the scale of a convention, its participants and its goals. But the broader momentum seems to be building, with bipartisan backing. If the framework for a constitutional convention doesn’t emerge from the current legislative session, the issue is expected to be prominent with candidates in the 2019 statewide elections. “I’ve only been here two years, but I’ve certainly been frustrated,” said Rep. Gary Carter, a New Orleans Democrat. “I certainly appreciate the need to set some long-term, lasting reforms in place.” Rep. Franklin Foil, a Baton Rouge Republican, said: “I think our constitution has become a very cumbersome document.”
Reality check: The state dollars that are locked up in the constitution are protected for a reason. The people backing the convention idea have yet to say what parts of the current constitution they propose to change. The devil, as always, is in the details.
Number of the Day
11.8 – Percentage of children from low-wealth families who were born in the 1980s and went on to earn a four-year college degree. The rate is virtually unchanged from the previous generation, even though college attendance rates have increased significantly (Source: The New York Times)