Today’s Arizona Republic Editorial:

Arizona voters said “no” to the sky-high interest rates of payday loans. It’s hard to believe the Legislature might turn around and say “yes.”

But payday lenders are lobbying up a storm to keep their special deal. They have a 10-year exemption from state interest-rate limits, which expires in July. It allows them to charge interest rates that amount to 400 percent a year.

That’s w-a-a-a-a-y above the 36 percent ceiling on other types of small-loan products.

Barely a year ago, in November 2008, voters decided whether to make the payday-lending deal permanent. They said “no” loudly and clearly by a ratio of 15-1.

No one can argue the voters didn’t understand the ballot proposition, with its limited reforms. The payday-loan industry spent $15 million pushing it.

Yet legislators are still considering whether to flout the will of the people. A bill was introduced this session that virtually duplicated the ballot measure.

That died, and now, there’s a version with a community contribution added as a sweetener.

Payday lending didn’t even exist in Arizona until 2000, when the Legislature passed the interest-rate exemption. Now, too many borrowers are getting caught in a spiral of repeatedly renewing the two-week loans and racking up huge interest costs. That’s why charities, such as St. Vincent de Paul, oppose extending the payday-lending exemption.

Military personnel ran into such problems with payday loans that performance and readiness suffered. In 2006, Congress prohibited loans to the military at annual interest rates above 36 percent.

The package proposed now, as a strike-everything amendment to House Bill 2370, calls for a 1.5 percent donation to “organizations that provide services to low-income and moderate-income individuals” in the communities in which a payday lender operates.

This vaguely worded category could include about anything and has nothing to do with the flaws of payday lending.

Workers who need $500 for an emergency aren’t going to magically find that money two weeks later, when the payday loan comes due. So, they take out repeated loans, paying $75 each time.

For someone who makes $8 to $9 an hour, the loan eats up more than a day’s pay.

Payday lenders have tried to drum up support with the specter of the jobs that would be lost if the exemption ends and they close up shop. But they’ve had plenty of time to prepare.

The number of payday-loan operations has already shrunk in anticipation of the July sunset.

Many outlets have expanded into other lines, such as prepaid credit cards. And this is hardly a source of stable jobs: Advance America, the nation’s largest payday lender, had 67 percent annual turnover among non-management employees last year.

Legislators often talk about the need for a level playing field. Giving payday lenders the right to charge 10 times more than other lenders is about as tilted as it gets.

Voters said “no.” Legislators must not say “yes.”

The Senate Appropriations Committee is scheduled to consider HB 2370 at its 1:30 p.m. meeting today.

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