Payday Loans Ordinance: Right idea, wrong implementation

By Nicole Forsythe The Kansas City Post On April 8th we will be asked to vote on a new ordinance restricting the operations of so-called “payday loan” offices in Kansas City. I fully support parts of this legislation such as the exterior signage limitations and location restrictions and commend the city council's attempt at protecting Kansas City neighborhoods. However, I wholly disagree with the annual licensing fees contained in the ordinance. What’s the problem? The fees are ineffective and inefficient in that: 1) The ordinance imposes only a $1000 renewal fee – enough to make payday loan establishments complain a little, but not enough to shut one down. 2) The ordinance ultimately results in a tax on the poor because the payday loan establishments will pass along the cost of the fee to its customers. 3) The ordinance directs this “tax on the poor” back to the city. It is abhorrent for payday loans to make money off of poor people, but through this ordinance, the city will too. 4) The only way to put payday loans out of business it to take away their customer base. Any fees that are collected through this ordinance should be directed to consumer education and counseling – not to the city. 5) The fees collected through this ordinance are purported to fund 2 or 3 inspectors. I am skeptical the predicted licensing revenues will account not only for the cost of salaries and benefits of the inspectors but the peripheral costs of administration and enforcement as well. The city can barely handle the financial problems it already has – why take on more? 6) Banking regulation is best handled at the state level, or perhaps, federal level. The payday loan problem is too complex to handle at the city level with the exception of density zoning which has proven successful in other communities. I’m sure this attempt at a crack-down on payday loan establishments will pass. After all, it feels right to tax the bad guys – it makes voters feel like the government is doing something to help the community. Unfortunately, I don’t think helping the community is that simple. Consequently, I won’t be voting to impose a minuscule fee on payday loan establishments – even though I think they’re bottom-feeding scam artists.