Issue: Payday & Title Lending Reform

Medicaid cuts loom, payday reform falls just short as Alabama Legislature ends 2016 regular session

By Chris Sanders

The Alabama Legislature’s 2016 regular session, which ended Wednesday, was more notable in many ways for what didn’t happen than for what did.

Lawmakers did not agree on a revenue solution to prevent devastating Medicaid cuts that would reduce health care access for hundreds of thousands of children, seniors, and people with disabilities in Alabama. Despite enormous public support, payday lending reform didn’t cross the finish line in the House. State education funding still hasn’t returned to where it was in 2008. And proposals to expand affordable housing and reform Alabama’s death penalty system gained little traction at the State House.

Still, progress was real on several of Arise’s priority issues. With minutes left in the session, lawmakers passed a bill to expedite voting rights restoration for thousands of Alabamians. Payday lending reform made it further in the Legislature than it ever has before, with a reform bill sailing through the Senate 28-1. And the new #IamMedicaid campaign continues to remind lawmakers and the public of the real human faces behind Alabama’s Medicaid debate.

Here is a recap of what happened on each of Arise’s issue priorities this session – and the action that may yet lie ahead on them this year.

State budgets

Deep Medicaid cuts in Alabama moved much closer to reality Tuesday when a bill that would have averted most of them died in a Senate committee. HB 569 would have used BP oil spill settlement money to help free up $70 million to go toward Medicaid’s $85 million shortfall, but the bill died when the Senate’s General Fund (GF) budget committee adjourned without voting on it. Committee chairman Sen. Trip Pittman, R-Montrose, ended the meeting after his colleagues voted 9-6 to side with a proposed substitute by Sen. Arthur Orr, R-Decatur. Orr’s plan would have reduced the amount of road money in the bill and distributed those funds to all areas of Alabama instead of just coastal areas. The substitute also would have increased the share of settlement money used for debt repayment, fully repaying the Alabama Trust Fund (which receives state revenue from oil and gas drilling) for money that the state borrowed to avoid massive GF cuts in recent years.

The Legislature may return later this year for a special session to address the Medicaid shortfall, but Gov. Robert Bentley said “everybody’s got to rest a little bit” before he makes that decision. Even though the regular session is over, lawmakers are expected to continue a series of weekly hearings on Medicaid’s funding structure and importance to the state’s health care system. Meanwhile, Alabama moves ever closer to a future when deep Medicaid payment cuts could prompt many pediatricians to leave the state and could imperil many of the rural hospitals and doctor’s offices upon which Medicaid patients and privately insured Alabamians alike depend. The cuts could end Medicaid coverage for outpatient dialysis and adult prescriptions and eyeglasses as well. Also on the chopping block could be the Program of All-Inclusive Care for the Elderly (PACE) in Mobile, which saves the state money by allowing participating seniors to live independently in their own homes instead of being sent to a nursing home.

The Education Trust Fund (ETF) budget drew many fewer headlines than the GF this year, but state education funding is still about 15 percent below its pre-recession level of 2008, adjusted for inflation. (Even the 2008 funding level was insufficient to meet many of Alabama’s educational needs.) The 2017 ETF budget includes a 33 percent boost in pre-K funding and provides a 4 percent pay raise for most K-12 teachers. Universities and two-year colleges also received slight increases.

Payday lending reform

Alabama’s payday reform movement enjoyed an unprecedented breakthrough in the Legislature this year when a reform bill passed 28-1 in the Senate, but the plan came up just short of final passage. SB 91, sponsored by Orr, was on the House calendar Tuesday but never reached the floor for a vote after a long day of filibusters. Orr’s bill would have given Alabama payday borrowers a more realistic path out of debt by slashing interest rates, allowing installment payments and giving borrowers at least six months to repay. (Current state law allows payday loans to carry interest rates of up to 456 percent a year.) Arise will work with Alabama Appleseed and other advocates to build on this year’s momentum and growing public support as the reform movement continues into 2017.

Voting rights

Alabama will speed up the voting rights restoration process for thousands of people if Bentley signs a bill that the Legislature passed Wednesday. With just minutes left in the session, the House passed SB 186, sponsored by Sen. Linda Coleman-Madison, D-Birmingham, and sent it to the governor. The clock struck midnight just before the Senate could consider another voting rights bill – HB 268, sponsored by Rep. Mike Jones, R-Andalusia – which would have clarified what counts as a “crime of moral turpitude” that bars someone from voting in Alabama. Other proposals to expand voting access, including multi-day voting and same-day voter registration, died in committee.

Death penalty reform

A bill to establish a state Innocence Inquiry Commission for death penalty cases – SB 237, sponsored by Sen. Dick Brewbaker, R-Montgomery – cleared the Senate this year but died Tuesday when the House Judiciary Committee didn’t vote on it. Other proposed reforms to Alabama’s death penalty system, including a three-year moratorium on executions, went nowhere. The U.S. Supreme Court on Monday ordered further review of Alabama’s capital sentencing scheme, which allows judges to override a jury’s sentencing recommendation. A state circuit judge in March declared Alabama’s judicial override system unconstitutional, but the state has appealed that ruling.

Tax reform

Alabama’s tax system will remain upside down for another year, as the Legislature declined to consider measures to end the state grocery tax or close corporate tax loopholes. A bill to increase the state property tax won Senate committee approval but went no further. A proposed 75-cent cigarette tax increase won the endorsement of the Alabama Health Care Improvement Task Force but was never introduced in the Legislature. Lawmakers did, however, enact new tax breaks for small businesses and for increased use of state port facilities. The Legislature also passed a bill – SB 208, sponsored by Orr – to require annual reports on whether tax incentives are producing their intended economic effects.

“Ban the box” legislation

SB 327, sponsored by Sen. Quinton Ross, D-Montgomery, won Senate committee approval on April 7 but never reached the Senate floor. The bill would have removed the criminal history checkbox from state job and license applications, removing a potential barrier to employment for thousands of Alabamians looking to rebuild their lives and provide for their families after serving their time for a criminal offense.

Housing Trust Fund (HTF)

A bill to increase the state mortgage recording fee and distribute some of the revenue to the state HTF died in a House committee. HB 341, sponsored by Rep. Patricia Todd, D-Birmingham, would have created a dedicated state funding source for the HTF, which could create thousands of jobs while addressing Alabama’s need for more than 90,000 affordable homes for residents with extremely low incomes.

Quick overviews of Arise’s 2016 issue priorities

By Alabama Arise

Your time is important, and your voice for a better Alabama is essential. That’s why we’ve prepared these quick overviews to keep you up-to-date on what’s happening at the Alabama Legislature on Arise’s 2016 issue priorities. We’ll update this post as needed.

“Ban the box” legislation: ‘Ban the box’ law would help rebuild lives in Alabama — The “criminal history checkbox” on many standardized job application forms often keeps otherwise qualified employees from making it to the next stage of the hiring process, where they could explain their past face-to-face. This creates discouraging barriers to employment for people who are looking to rebuild their lives after serving their time and paying their debt to society. A growing national “ban the box” movement to remove those checkboxes from job applications is helping former inmates become productive members of society and provide for their families. It could do the same for thousands in Alabama. (The Senate Judiciary Committee on April 7 approved SB 327, which would “ban the box” on state job and license applications, but the Senate never voted on it.)

Death penalty reform: Death is different: Reforming Alabama’s capital punishment system — People accused of capital crimes deserve every possible safeguard to ensure the integrity of a conviction. This overview examines several bills that could lower the risks of errors and injustice and could bring Alabama law into compliance with U.S. Supreme Court rulings.

Health care: Medicaid RCOs: Better care, better health, lower costs — Medicaid’s promising new regional care organization (RCO) reforms are designed to keep patients healthier while cutting health care costs. Investing in preventive care now should pay off in fewer costly emergency room visits later. (The Legislature on April 5 overrode the governor’s veto to pass a General Fund budget that would force deep Medicaid cuts. Lawmakers may return later this year for a special session to address Medicaid’s funding shortfall.)

Housing: Home at last: The Alabama Housing Trust Fund — Alabama has a shortage of almost 90,000 affordable and available homes for residents with extremely low incomes. State funding for the Alabama Housing Trust Fund (HTF), created in 2012, could reduce this shortfall and make dreams of home a reality for tens of thousands of families, seniors, veterans, and people with disabilities.

Payday lending reform: SB 91: A step in the right direction for Alabama borrowers — Payday loans in Alabama carry astonishingly high interest rates: up to 456 percent a year. A Senate proposal would give payday borrowers a less expensive path out of debt by reducing the maximum interest rate and allowing borrowers to pay off their loan in installments over time. (The Senate passed the bill 28-1 on April 5. A House committee approved a different version of SB 91 on April 27, but the regular session ended without a House vote on either version.)

State budgets: Alabama’s education budget begins to rebuild, but General Fund struggles put Medicaid at risk — The usual contrast between Alabama’s starving General Fund budget and its slightly healthier but still inadequate Education Trust Fund budget is exceptionally stark this year. As education finally climbs back toward its 2008 funding level after years of enormous cuts, the latest General Fund shortfall threatens devastating Medicaid cuts with effects that could ripple through the state’s entire health care system. (The Legislature on April 5 overrode the governor’s veto to pass a General Fund budget that would force deep Medicaid cuts. Lawmakers may return later this year for a special session to address Medicaid’s funding shortfall.)

Tax reform: Cigarette tax for Medicaid: A win-win to improve health and fill Alabama’s revenue gap — The future of Alabama Medicaid is on the line as lawmakers confront yet another threadbare General Fund budget. Without significant new long-term revenue, Medicaid will continue to be at risk of cuts to vital services and doctor payments that could place the entire program — and Alabama’s entire health care system — at risk. A cigarette tax of 75 cents per pack could provide long-term revenue needed to avoid those cuts, while also reducing health care costs and saving lives in Alabama.

Voting rights: A menu of options to improve voting rights in Alabama — Our entire democratic system depends on how elections are structured and who can participate. When barriers exclude people from voting, they often lose faith in a system that doesn’t seem to value their voice in our society’s decision-making process. This overview examines several bills that would protect and expand voting rights, including proposals related to early voting, streamlined voter registration and voting rights restoration. (SB 186, which would expedite the state’s voting rights restoration process, has gone to Gov. Robert Bentley after passing the Senate on April 19 and the House on May 4. Different versions of HB 268, a bill to clarify which crimes are “crimes of moral turpitude” that permanently disqualify offenders from voting in Alabama, passed the House on April 19 and the Senate on May 3, but the plan died May 4 when the regular session ended before the House could vote on a proposed conference committee version.)

Posted March 7, 2016. Last updated May 5, 2016.

Time running short for payday reform as Alabama House committee holds hearing but doesn’t vote

By Stephen Stetson

The fate of payday lending reform in Alabama this year could hinge on whether the House Financial Services Committee chooses to meet again before next week, and whether its members approve SB 91, sponsored by Sen. Arthur Orr, R-Decatur.

The committee chose not to vote on the bill after hearing nearly two hours of testimony Wednesday morning, including support from Arise and other advocates for payday lending reform. Payday loans are short-term loans for $500 or less, and carry annual interest rates of up to 456 percent in Alabama.

Because committee members didn’t vote after the hearing, they will need to reconvene to determine the fate of the bill, which the Senate passed 28-1 earlier this month. If the committee waits until next week to meet, it will reduce the chance that the bill can reach the House floor in time to pass before the 2016 regular session ends. Just five meeting days will remain in the session after this week.

Rep. Danny Garrett, R-Trussville, presented Orr’s SB 91 to the committee and emphasized the urgent need to act swiftly. “This is the last chance for reform in this session,” Garrett said.

Orr’s bill would reform Alabama’s payday lending laws to be similar to those in Colorado, where prices for borrowers are substantially lower than Alabama’s. SB 91 would reduce interest rates on payday loans and give borrowers at least six months to repay their loans. It also would allow borrowers to pay down the principal in installments, helping them escape debt more quickly.

In addition to Arise, other supporters testifying in favor of SB 91 included representatives of Alabama Appleseed and the YWCA of Central Alabama, as well as Dr. Neal Berte, a former Birmingham-Southern College president who has been a tireless and persuasive advocate for reform.

The committee also heard opposition from payday lending industry representatives, who said Colorado-style reform would prevent them from making loans in Alabama. Colorado has many payday lenders that remain profitable while charging prices roughly one-third of that typically charged in Alabama.

Title loan bill also receives hearing but not a committee vote

The SB 91 hearing Wednesday followed a separate hearing on HB 526, an auto title loan bill sponsored by Rep. Rod Scott, D-Fairfield. That bill would create a special statute for title loans, removing them from the Alabama Pawnshop Act, which caps the maximum interest rate on title loans at 300 percent a year.

Under HB 526, interest rates on title loans in Alabama would be capped at 120 percent a year, in addition to numerous other provisions regulating the issuance of such loans. In an unusual twist, title lenders and consumer advocates (including Arise) both testified in opposition to the bill.

The committee heard testimony but did not vote in February on a reform bill – HB 326, sponsored by Rep. Patricia Todd, D-Birmingham – supported by Arise and other members of the Alliance for Responsible Lending in Alabama (ARLA). The bill would cap title loan interest rates at 36 percent a year.

By Stephen Stetson, policy analyst. Posted April 20, 2016.

Payday lending reform gains momentum as second bill clears committee in Alabama Legislature

By Stephen Stetson

Payday lending reform continued to pick up steam Wednesday as an Alabama House committee approved a proposal to reduce interest rates and limit the amount that payday borrowers can borrow each year. HB 297, sponsored by Rep. Danny Garrett, R-Trussville, now moves to the House.

The House Financial Services Committee weakened Garrett’s bill by adopting an amendment offered by Rep. Reed Ingram, R-Montgomery. Still, HB 297 may remain the best hope for payday lending reform in the House this year. (AL.com has more details on Wednesday’s committee debate on HB 297.)

HB 297, as amended, would cap annual interest rates on payday loans at 180 percent in Alabama. Current state law allows interest rates of up to 456 percent a year. Arise testified on Garrett’s original bill last week.

Garrett’s bill originally proposed lowering payday loan fees to $12.50 per $100 borrowed, a reduction from the $17.50 now permitted in Alabama. But Ingram’s amendment would set the fee at $15. Garrett’s bill also would have limited borrowers to six loans per year, or $2,500. The amendment would eliminate the limit on the number of loans per year, and raise the cap on annual borrowing to $4,000.

Those changes allowed the bill to earn the endorsement of state Banking Superintendent John Harrison, who spoke to the committee at length. Harrison’s support could prove important as the bill now awaits debate on the House floor.

“When you don’t have anybody happy, then you’re getting pretty close to getting something that is workable and that will absolutely protect those consumers, and that’s what we want to do,” Harrison told lawmakers.

The committee approved Ingram’s amendment after rejecting an amendment offered by Rep. Oliver Robinson, D-Birmingham. That amendment would have converted payday loans into longer-term debt instruments. Robinson’s amendment was supported by Reps. Marcel Black, D-Tuscumbia; Mike Hill, R-Columbiana; and Thad McClammy, D-Montgomery.

Advocates were thankful to Rep. Merika Coleman-Evans, D-Birmingham, for calling for a roll call vote on each of the recorded votes on HB 297.

Senate expected to consider payday lending reform again next week

Payday loan reform is likely to be a topic again in the Alabama Senate once again next week. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, is expected to return to the Senate floor for debate. The bill cleared an important procedural hurdle last week, but the Senate delayed further debate on it.

SB 91 would reduce interest rates on payday loans and mirror many of Colorado’s 2010 reforms. Orr’s bill, which Arise supports, also would give borrowers at least six months to repay their payday loans, increasing affordability and reducing default risk. In addition, SB 91 would allow payday borrowers to pay down the principal in installments instead of the all-or-nothing, lump-sum payment now required.

By Stephen Stetson, policy analyst. Posted March 16, 2016.

Alabama Senate considers payday lending reform bill but doesn’t vote on it

By Stephen Stetson

Payday lending reform got a debate but not a vote Thursday in the Alabama Senate. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, cleared a procedural hurdle and received brief debate on the Senate floor, but lawmakers ultimately took no action on the measure. Still, the bill, which is supported by Arise and models Colorado’s payday loan laws, could return to the Senate floor next week.

Payday loans are short-term loans that carry annual interest rates of up to 456 percent a year in Alabama, often trapping borrowers in cycles of debt that can be hard to escape. SB 91 would reduce the interest rates and give borrowers at least six months to repay their loans, increasing affordability and reducing the default risk. The bill also would allow payday borrowers to pay down the principal in installments instead of the all-or-nothing, lump-sum payment now required.

The bill immediately came under heavy fire from several senators. Sen. Bobby Singleton, D-Greensboro, urged Orr simply to wait for the federal government to issue payday loan regulations. Sen. Trip Pittman, R-Montrose, also began to express concerns about the bill, but the Senate postponed further discussion of the bill after rejecting a proposed amendment by Orr.

Perhaps the most significant news from Thursday is that the Senate adopted a budget isolation resolution (BIR) on the bill. The BIR is a procedural vote required to debate any non-budgetary bill before the Legislature passes state budgets. That vote removed an obstacle from SB 91’s path and puts it in position for an up-or-down vote if the bill does return to the Senate floor.

Arise testifies in favor of House lending reform bills

House members may consider other lending proposals next week, representing alternative paths to reform. The House Financial Services Committee heard testimony this week on an auto title lending reform bill and two payday lending reform bills, though no votes were taken. Arise testified in favor of all three bills Wednesday, and the committee could vote on them next week.

Rep. Patricia Todd, D-Birmingham, sponsors two of those bills. HB 342 is the House version of SB 91’s payday lending reforms, and HB 326 would cap interest rates at 36 percent a year on almost all title loans in Alabama.

The committee also could consider another plausible path to payday lending reform: HB 297, sponsored by Rep. Danny Garrett, R-Trussville. The bill would reduce payday loan interest rates and extend repayment periods, though it would not allow installment payments.

By Stephen Stetson, policy analyst. Posted March 10, 2016.

Payday lending ‘compromise’ bill clears Alabama Senate committee

By Stephen Stetson

A bill that its sponsor describes as “a compromise” on payday loan reform emerged from an Alabama Senate committee Wednesday. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, is called “Colorado-style reform,” because it models changes to consumer lending laws approved by that state in 2010.

The bill now awaits a Senate vote. No other payday or auto title lending reform legislation has been introduced so far during the 2016 regular session.

SB 91 would cap payday loan interest rates in Alabama at about 180 percent a year. The payday loan industry has continued to exist in Colorado after that state’s reforms, but it was reduced in size. The number of defaults and bounced checks also have declined.

The bill cleared the Senate Banking and Insurance Committee, with at least three senators voting against approval. Committee members opposing SB 91 were Sens. Bill Holtzclaw, R-Madison; Shay Shelnutt, R-Trussville; and Tom Whatley, R-Auburn. Whatley moved to carry the bill over, which would have delayed a vote on it, but the committee rejected that motion. No public hearing was held on SB 91, but the measure sparked considerable discussion among committee members.

Orr repeatedly described his bill as “a middle ground” between consumer advocates and the payday loan industry. Arise, Alabama Appleseed and other consumer groups long have pushed for interest rates on payday loans to be capped at 36 percent a year in Alabama. (Current state law allows rates of up to 456 percent a year.) Payday lenders oppose any such change.

By Stephen Stetson, policy analyst. Posted Feb. 17, 2016.

The high costs of payday and auto title lending in Alabama

By Stephen Stetson

How much should people have to pay to get financial help in a tight spot? Payday and auto title lending are two forms of high-cost credit marketed toward Alabamians who are desperate for short-term cash. These loans carry triple-digit interest rates that can threaten the economic well-being of borrowers who fall behind on payments.

What went well in 2015 — and the challenges that remain for Alabama

By Kimble Forrister

It’s over! But it’s not over yet. After approving a wholly inadequate General Fund budget that would jeopardize our state’s future, the Alabama Legislature ended the 2015 regular session Thursday. But Gov. Robert Bentley vetoed that budget, and he will call lawmakers back for a special session on the budget later this summer.

Arise members celebrated some big victories this year, but major challenges still remain. Here’s a quick review of how Arise issues fared:

Budgets and taxes: None of Bentley’s revenue bills passed. Without new revenue, vital services like Medicaid and public safety face devastating cuts that would hurt Alabama’s quality of life for years to come. Just a few examples:

  • Thousands of Alabamians would lose community-based mental health care services.
  • Medicaid would end coverage of crucial services like outpatient dialysis and prosthetics.
  • State prisons would be even more overcrowded and at greater risk of federal takeover.

But there was some good news, too. Lawmakers overwhelmingly approved a bill to save money and give Alabamians more choices in Medicaid long-term care services. The state will have a powerful new tool – a “tax expenditure report” – to determine if tax breaks are worth the cost. And a new prison reform law will help save money and reduce overcrowding – but it only takes effect if the state funds it.

Ending Alabama’s lifetime SNAP ban: Alabamians can celebrate a big win for second chances! The prison reform bill includes language ending the state’s lifetime SNAP and TANF eligibility bans for people with a past felony drug conviction. Thousands of people can regain SNAP eligibility on Jan. 30, 2016, if the prison reform law gets the money required for it to take effect.

Alabama Accountability Act: The Legislature approved major changes to the act. The new version allows more money that would have supported public education to go to private schools instead – but it also includes some of Arise’s recommendations for greater accountability and transparency.

Housing Trust Fund: A bill to fund affordable housing in Alabama encountered powerful opposition and did not emerge from committee. Supporters plan to meet with opponents to seek agreement before the 2016 session.

Payday and title lending reform: In a big win for consumers, the Alabama Supreme Court ruled the state Banking Department can create a single statewide database of payday loans. But much work remains in the drive for a 36 percent interest rate cap: No bills to regulate payday or auto title loans passed, but public pressure for reform continues to grow.

The regular session is over, but Arise’s work continues. Stay tuned for updates as we prepare for this summer’s crucial debates over our state’s future. Together, we can build a better Alabama for all!

By Kimble Forrister, executive director. Posted June 4, 2015. Updated June 12, 2015.

Title loan reform bill gets hearing, but Alabama House committee doesn’t vote on it

By Stephen Stetson

An auto title loan reform bill finally got a public hearing before the Alabama House Financial Services Committee on Wednesday, nearly two months after its introduction. But as is customary, the committee did not vote on the bill on the same day as the hearing. A vote could come next week.

HB 400, sponsored by Rep. Rod Scott, D-Fairfield, would cap interest rates on title loans in Alabama at 36 percent a year. State law now allows title lenders to charge rates of up to 300 percent a year.

Several people testified about the bill, including a spokeswoman for TitleMax, one of the nation’s largest title lenders. She claimed a 36 percent rate cap would put title lenders out of business.

Supporters testifying in favor of the bill included Arise’s Stephen Stetson, Joe Godfrey of the Alabama Citizens’ Action Program (ALCAP) and Alabama Appleseed legal director Shay Farley. Farley explained the dollar cost of high-cost auto title transactions to committee members. “Anybody can look at the numbers and see that this isn’t right,” she said.

HB 400, this year’s only title loan reform bill, was introduced in early April and has 67 bipartisan co-sponsors, nearly two-thirds of the House’s membership. With just seven meeting days left in the 2015 regular session, time is running short for the bill to clear both the House and Senate. Check out the Montgomery Advertiser’s coverage to learn more.

By Stephen Stetson, policy analyst. Posted May 20, 2015.

Another win for payday lending reform as Alabama House committee OKs six-month repayment bill

By Stephen Stetson

Payday lending reform advocates in Alabama scored two victories at the State House on Wednesday. First, a strong reform bill (HB 531) cleared the House Financial Services Committee without opposition. Shortly thereafter, a bill to expand the maximum size of payday loans (SB 446) stalled in the Senate Banking and Insurance Committee.

HB 531, sponsored by Rep. Danny Garrett, R-Trussville, would extend the amount of time that payday borrowers have to repay their loans to six months, effectively reducing interest rates to 36 percent a year. Current state law allows lenders to demand repayment of payday loans anywhere between 10 and 31 days after the loan is issued. In practice, most payday loans in Alabama are for 14 days.

Garrett presented a robust defense of his legislation, which has 38 bipartisan co-sponsors. He presented a lengthy description of the history of payday lending reform, along with the importance of giving borrowers sufficient time to repay their loans.

Payday loans in Alabama are short-term loans that carry annual interest rates of up to 456 percent. “I’m a free-market conservative, but I don’t think this makes sense,” Garrett said.

The House committee approved Garrett’s bill without an opposing vote. It now awaits action by the full House. A Senate version of the measure – SB 335, sponsored by Sen. Slade Blackwell, R-Mountain Brook – also won committee approval last month and awaits a Senate vote.

Bill to expand payday loan size in Alabama delayed in Senate committee

Later Wednesday, Arise’s Stephen Stetson and other consumer advocates testified against a bill that would double the size of payday loans allowed in Alabama. A Senate committee took no action on SB 446, sponsored by Sen. Tom Whatley, R-Auburn, but the bill could return as soon as next week.

The bill had been moving quickly this week. Whatley introduced the measure Tuesday, and it was brought up for a committee hearing the next day. The plan received a public hearing before Whatley agreed to carry over the bill until a future date after Sen. Bill Holtzclaw, R-Madison, raised questions about interest rates on other loans.

Under current Alabama law, payday loans may not be for more than $500. But Whatley’s bill would allow payday borrowers to take out up to $1,000 at a time while leaving the maximum interest rate on the loans – 456 percent a year – unchanged.

Wednesday’s committee action came two weeks after an Alabama Supreme Court decision cleared the way for a statewide payday loan database. The court upheld the state Banking Department’s power to create the database to help enforce the state’s existing $500 cap on overall payday loan debt.

By Stephen Stetson, policy analyst. Posted May 6, 2015.