Rich-Joseph Facun / Arizona Daily Star 2006

More Photos (2):

Related articles:

Ad watch: Prop. 200 and payday loansFollow military's lead on payday loansIf pro-lender proposition fails, 100+ empty stores could dot Tucson area

Other articles by Shelley Shelton:

Soda-can tabs add up for ailing kids Red Rock: bliss in the booniesRed Rock is growing up Community notes Caring for little ones is a big job Marana lauds two long-timers Budget gets council's OK, but not without some cuts Public is welcome here Town puts in place new ethics policy Community notes

Sales and Marketing
Everready Glass
Sales Reps Construction
West-Press
Printing Administrative & Professional
Tucson Urban League
CEO/President Finance and Accounting
Charles E. Gillman Company
Accounting Specialist Trades/Construction
RANCHO RESORT
MAINTANANCE POSITION Health Care
Dependable Health Services
Physical Therapists Administrative & Professional
Jorgensen Brooks Group
Counselor

Proposition 200 may be one of the more confusing ballot initiatives in this year's election.

Simply hearing the initiative's more common name, the Payday Loan Reform Act, a person opposed to payday lending might think it's something to vote for.

Likewise, folks who believe payday lending is a viable option that should remain that way could hear the name and think it's something they don't want.

Bottom line, Prop. 200 would preserve the payday lending industry by replacing the current law authorizing it, which expires in 2010, with a law that authorizes payday lending in Arizona indefinitely, with some reforms.

Confused?

Here's what the backers — the Arizona Community Financial Services Association, representing the state's payday lenders — are hoping to accomplish with the initiative and what some opponents have to say about it.

Extends the life of payday-loan industry in Arizona indefinitely, by repealing a law that would end state licensing of payday lenders July 1, 2010.

It also enacts a new payday-lending law with certain reforms including requiring bilingual loan agreements, a prohibition of some fees, requiring payment plans if requested and limiting the payday loans that one borrower can obtain.

Effectively shuts down the legal payday loan industry in Arizona by retaining the current law regarding payday loans, which is set to terminate on July 1, 2010.

Source: Arizona Secretary of State

"The initiative answers every assertion made by opponents of the industry, but opponents are still not happy because opponents want elimination of the industry."— Stan Barnes, Yes on 200 chairman

"If these were truly two-week loans, I doubt anyone would notice. But these are not two-week loans."— State Rep. Marian McClurethe two sides debate:

Stan Barnes, chairman of the Yes on 200 campaign in favor of the proposition, said the industry is willing to make changes in how it does business in order to survive.

Barnes, a political consultant and former Republican legislator, said the main objections to payday loans — the industry's interest rate, rollover loans and whether people take out more than one payday loan at a time — all are addressed in the ballot measure.

He objects to opponents' continued discussion of the loans in terms of "annual" interest rates, because they are fee-based, two-week loans.

But Attorney General Terry Goddard, a Democrat, called the industry "an abomination."

Proposition 200 would only lower the annual percentage rate of a payday loan from 460 percent to 391 percent, he said.

"It's still an outrageous percentage. It victimizes consumers," Goddard said.

State Rep. Marian McClure, a Republican who spearheaded an unsuccessful initiative to ban payday loans, said despite the reforms in the measure, payday lenders will find loopholes that will allow them to keep people in debt.

Rep. Jonathan Paton, R-Tucson, said in a letter included in the secretary of state's ballot publicity pamphlet that better regulation would curb payday-loan abuses and cut industry revenues, pushing many marginal loan firms out of the business.

• Borrowers typically write a check for the loan amount, up to $500, plus a fee and promise to pay off the loan come next payday, usually within two weeks. The idea is that the check can be cashed on payday.

• Frequently, if borrowers are unable to pay the loans when due, they can pay just the interest in exchange for taking out a new loan in the same amount.

• Proposition 200 contains language to limit such rollover activity and make people wait at least one business day to take out a new payday loan after paying off an old one.

$325

Average payday loan amount nationally

$516

Average fees paid in addition to that amount

9

Number of loans the average borrow takes in a year

$841 million

Amount of payday loans made in Arizona each year

$148.5 million

Amount collected in fees from those loans

459%

Current annualized interest rate of two-week loans that go unpaid

391%

Annualized interest rate of two-week loans that go unpaid if Proposition 200 passes

— Center for Responsible Lending