Legislative Update - April 25, 2014

After a short break for Easter/Passover, we’ve been back at work at the Capitol this week. I spent the break meeting with constituents in our community. It was great to see and talk to so many of you about the work that’s been accomplished so far this session: middle-class tax cuts, business-to-business tax repeals, and the Safe and Supportive Schools Act. I hope you all had a wonderful Easter and Passover!

Public Integrity Legislation

Today we passed HF 1961, a bill I chief authored that would require greater financial disclosure from public officials and improve public integrity. The bill passed on a bipartisan vote of 76-48.

Minnesota is known as a state with strong public integrity, but our laws don’t support that integrity. Our laws were ranked just 25th in the nation in a State Integrity Investigation from the Center for Public Integrity. This bill is a step toward greater transparency and will give the public more confidence in our public officials.

The bill expands the ability of the Campaign Finance and Public Disclosure Board to conduct audits and adds the financial interest of the public official’s spouse to the situations that may require disclosure. Under the bill a public official who takes official action on an issue that would substantially affect the financial interest of the official’s spouse must disclose the potential conflict of interest.

The bill also requires individuals who file a statement of economic interest to list the applicable business or professional activity codes if the individual owns more than a 25% interest in the business and receives more than $50 in any month as an employee, or the individual received more than $2500 in compensation in the past year as an independent contractor.

Women’s Economic Security Act

Before the break, we passed the Women’s Economic Security Act. The package aims to close the gender pay gap, strengthen workplace protections and flexibility for pregnant mothers, and expand employment opportunities for women in high-wage, high-demand professions.

Even as Minnesota’s economy continues to improve, barriers like high costs for childcare and the pay gap between men and women doing similar work continue to put a drag on the economy.

In Minnesota, women earn 80 cents for every dollar a man makes for a similar job. Many women are stuck in traditional ‘women’s fields’ and others have faced workplace discrimination because they’re pregnant or nursing.

Addressing these issues is good for Minnesota’s economy. When women have equal opportunities to succeed, it means stronger families, stronger communities, and a brighter economic future for our state. I’m proud to support this legislation and was pleased to see bipartisan support for the bill when it passed.

Legislation Limiting Predatory Payday Lending

Yesterday, we passed HF 2293, a bill limiting payday lending. “Payday loans” are very short-term loans made with almost no underwriting (checking of borrower’s credit and ability to repay). Organizations ranging from the Joint Religious Legislative Coalition to the U.S. Department of Defense have all concluded that payday lenders tend to trap a majority of their customers in a vicious cycle of debt.

The Consumer Financial Protection Bureau (CFPB) recently studied payday loan transactions, and found that almost half of the borrowers took out 11 or more payday loans in a 12-month period; 14 percent of the borrowers made 20 or more.

Payday lenders charge fees generally ranging from $10 to $20 per $100 borrowed. When the borrowing extends to a longer-term, however, the resulting cost is incredibly high. To put it in the context of other loan products, a $15 fee per $100 borrowed on a 14-day loan equates to an Annual Percentage Rate (APR) of 391 percent.

HF 2293 aims to remove all lender incentives to profit from chain borrowers, and ensure they pay some attention to their customers’ financial situations:

• If this bill becomes law, Minnesota payday lenders will have to check the borrower’s credit history and confirm that their borrower has not already committed 41 percent or more of their income with obligations for housing, other loans and credit, or child support/alimony. Payday lenders would also be required to enter all new loans into a credit reporting system.
• The bill bars payday lenders from lending to borrowers who have already taken out 4 payday loans in the prior 12 months, or have been in debt on payday loans for more than 90 days out of the last 365.
• Another provision would require payday lenders to inquire whether their borrower is on active-duty military service, or is the spouse or dependent of someone serving on active duty, and if so, they cannot charge more than the 36 percent APR for a loan (roughly $15 per $1,000 borrowed). The 36 percent cap is in a federal law adopted after the Department of Defense studied the industry’s effect on junior soldiers. 
• The bill also strips payday lenders of the ability to roll “costs” into their loans at any chosen rate, but must follow the rate schedule for other “small loans,” which are around 10 percent of the loan amount and diminish with larger loan amounts.

If you have any questions, please do not hesitate to contact me. Thank you for the honor of representing you in the Minnesota House of Representatives.

Sincerely,

Laurie Halverson

State Representative

District 51B