Arizona Republic reports:

A proposal to keep payday-loan businesses alive in Arizona failed in committee Tuesday.

The Senate Appropriations Committee voted 5-3 to kill House Bill 2370, which would have allowed the lenders to continue offering high-interest short-term loans – with new rules.

In 2008, voters soundly rejected an industry-backed initiative that would have allowed the lenders to stay open permanently.

“This is a vote of the people (that) needs to be respected. This industry has had 10 years to adjust and adapt to this process. They knew the sunset was coming,” said Sen. Paula Aboud, D-Tucson.

Chief Executive Officer Ted Saunders of Ohio-based Checksmart Financial said that after the proposition failed with voters, his company worked hard to find a solution to keep the businesses open.

Checksmart, which has 46 payday-loan stores in Arizona, stands to lose more than 50 percent of its business in Arizona, Saunders said.

“Thousands of customers will not be served and will have to go to more expensive options,” Saunders said, adding that payday loans are “the least expensive alternative in the marketplace.”

In Arizona, there are 596 payday-loan businesses that provide an estimated 2,500 jobs, according to lobbyist and former state senator Stan Barnes of Copper State Consulting. The average employees make $12 to $15 per hour with benefits, industry experts say.

Holly Bush, 26, of Mesa, a manager at a payday-loan center in Globe, is worried she will lose her job.

“I am in one of the largest centers in the state. Not only that, I would have hundreds of customers that would suffer,” Bush said.

Payday-loan centers arrived in Arizona a decade ago after the Legislature approved a 10-year exemption to the state’s 36 percent cap on interest rates. That exemption expires June 30. In 2008, the industry asked Arizona voters to make the 10-year interest-rate-limit exemption permanent. Voters said no.

Sen. Chuck Gray, R-Mesa, said: “In my book, we need to let that sunset come and let payday loans go.”

Sen. Russell Pearce, R-Mesa, proposed the strike-everything amendment to House Bill 2370 that would have, among other things, allowed fees of $15 per $100 borrowed, restricted the number of loans an individual could take out at one time and allowed a customer to rescind the transaction if the money was returned within two business days.

It also would have required businesses to give at least 1.5 percent of the fees it collects to “organizations that provide services to low-income and moderate-income individuals.”

Pearce’s push is the second attempt this session to propose a bill that would preserve the industry. Rep. Andy Tobin, R-Paulden, proposed House Bill 2161, which would have done the same thing Pearce’s amendment proposed – without the payout to community groups. That bill has not had a hearing.

The Associated Press contributed to this article.

To add your comments, click here.