Published: October 13, 2008 06:59 pm            

Worth watching — 10/14/08

Fate of 2 issues on Ohio ballot could influence Kentucky

Two issues on the Nov. 4 ballot in neighboring Ohio could have a bearing on the fate of similar issues in Kentucky. Depending open how voters in the Buckeye State vote, the odds of legislators in Kentucky approving limits on payday lending and placing a casino gambling amendment on the ballot could be either enhanced or diminished.

At the same time bills to restrict payday lending were going nowhere in the 2008 Kentucky General Assembly, legislators in Ohio approved one of the nation’s strongest laws limiting how much interest private companies can charge for short-term loans. The law, approved with strong bipartisan support, would cut the annual percentage rate that lenders can charge from 391 percent to 28 percent. It would also limit the number of loans customers can take to four per year.

However, payday lenders conducted a successful petition campaign to place Issue 5 on the November ballot which, if approved, would overturn the law. Proponents of Issue 5 say the bill approved by legislators would destroy the payday lending industry in Ohio, resulting in the elimination of 6,000 jobs. They also contend that the high-interest loans are the only way those with poor credit histories can get the money they need to meet financial emergencies like paying a utility bill before service is cut off or purchasing critically needed prescription medicines.

None of the Kentucky bills to put limits on payday lenders have been as strict as what Ohio approved. However, none have ever come close to be approved by the Kentucky General Assembly.

If Issue 5 fails in Ohio — as it should — it could give reluctant legislators in Frankfort the courage to approve reasonable restrictions on payday lending. If, however, Issue 5 is approved by Ohio voters, the chances of Kentucky enacting such restrictions are greatly weakened. Unfortunately, one can watch the television ads being run in Ohio by the payday lenders and not even realize Issue 5 has anything to do with how much interest a lender can charge. The ads are intentionally vague and misleading.

Also on the November ballot in Ohio is a constitutional amendment that, if approved, would allow a resort casino to be built in Clinton County near Wilmington. With the casino being located near Interstate 71 about halfway between Columbus and Cincinnati, approval of the amendment would increase pressure for Kentucky to approve gambling casinos to compete with neighboring states for the gambling dollar. In fact, it would leave Tennessee as the only state bordering Kentucky without some sort of casino-style gambling.

Of course, Ohio voters have four times rejected amendments to allow casinos and they could well do it again. If so, then the odds of getting a casino amendment on the Kentucky ballot — already not particularly strong — become a little longer.

We believe payday lenders primarily serve the gullible and the desperate and take advantage of the poorest people in the state. We wish Kentucky would place restrictions on how much interest they can charge. While we don’t think casinos are the answer to Kentucky’s revenue woes, we do think it is an issue that should be decided by Kentucky voters, not by legislators in Frankfort.

        

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