03/24/2025 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB116 | |
| HB132 | |
| SB79 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 116 | TELECONFERENCED | |
| += | HB 132 | TELECONFERENCED | |
| += | SB 79 | TELECONFERENCED | |
| *+ | HB 146 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 24, 2025
3:17 p.m.
DRAFT
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Carolyn Hall, Co-Chair
Representative Ashley Carrick
Representative Robyn Niayuq Burke
Representative Dan Saddler
Representative Julie Coulombe
Representative David Nelson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 116
"An Act exempting from insurance regulation cooperative
agreements entered into by two or more persons engaged in
commercial fishing for the purpose of paying claims or losses."
- MOVED HB 116 OUT OF COMMITTEE
HOUSE BILL NO. 132
"An Act relating to loans in an amount of $25,000 or less;
relating to the Nationwide Multistate Licensing System and
Registry; relating to deferred deposit advances; and providing
for an effective date."
- HEARD & HELD
SENATE BILL NO. 79
"An Act relating to wage payments."
- HEARD & HELD
HOUSE BILL NO. 146
"An Act prohibiting public employers from disclosing certain
public employee personal information; making disclosure of
certain public employee personal information an unfair labor
practice; and creating an exception to the Public Records Act
for certain public employee personal information."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 116
SHORT TITLE: COMMERCIAL FISHING INSURANCE CO-OP
SPONSOR(s): FISHERIES BY REQUEST OF TASK FORCE EVAL ALASKA
SEAFOOD INDUSTRY
02/26/25 (H) READ THE FIRST TIME - REFERRALS
02/26/25 (H) FSH, L&C
03/01/25 (H) FSH AT 11:00 AM GRUENBERG 120
03/01/25 (H) -- MEETING CANCELED --
03/04/25 (H) FSH AT 10:30 AM GRUENBERG 120
03/04/25 (H) Heard & Held
03/04/25 (H) MINUTE(FSH)
03/06/25 (H) FSH AT 10:00 AM GRUENBERG 120
03/06/25 (H) -- MEETING CANCELED --
03/11/25 (H) FSH RPT 6DP 1NR
03/11/25 (H) DP: VANCE, KOPP, EDGMON, HIMSCHOOT,
ELAM, STUTES
03/11/25 (H) NR: MCCABE
03/11/25 (H) FSH AT 10:00 AM GRUENBERG 120
03/11/25 (H) Moved HB 116 Out of Committee
03/11/25 (H) MINUTE(FSH)
03/13/25 (H) FSH AT 10:00 AM GRUENBERG 120
03/13/25 (H) <Bill Hearing Canceled>
03/21/25 (H) L&C AT 3:15 PM BARNES 124
03/21/25 (H) -- MEETING CANCELED --
03/24/25 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 132
SHORT TITLE: LOANS UNDER $25,000; PAYDAY LOANS
SPONSOR(s): EISCHEID
03/11/25 (H) READ THE FIRST TIME - REFERRALS
03/11/25 (H) L&C, FIN
03/17/25 (H) L&C AT 3:15 PM BARNES 124
03/17/25 (H) <Bill Hearing Canceled>
03/19/25 (H) L&C AT 3:15 PM BARNES 124
03/19/25 (H) <Bill Hearing Canceled>
03/24/25 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 79
SHORT TITLE: PAYMENT OF WAGES; PAYROLL CARD ACCOUNT
SPONSOR(s): LABOR & COMMERCE
01/31/25 (S) READ THE FIRST TIME - REFERRALS
01/31/25 (S) L&C
02/07/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/07/25 (S) Heard & Held
02/07/25 (S) MINUTE(L&C)
02/12/25 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/12/25 (S) Moved SB 79 Out of Committee
02/12/25 (S) MINUTE(L&C)
02/14/25 (S) L&C RPT 2DP 2NR
02/14/25 (S) DP: BJORKMAN, GRAY-JACKSON
02/14/25 (S) NR: MERRICK, YUNDT
02/24/25 (S) TRANSMITTED TO (H)
02/24/25 (S) VERSION: SB 79
02/26/25 (H) READ THE FIRST TIME - REFERRALS
02/26/25 (H) L&C
03/19/25 (H) L&C AT 3:15 PM BARNES 124
03/19/25 (H) Heard & Held
03/19/25 (H) MINUTE(L&C)
03/24/25 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE LOUISE STUTES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced HB 116.
MATT GRUENING, Staff
Representative Louise Stutes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Stutes, prime
sponsor, presented HB 116 to the committee.
HEATHER CARPENTER, Deputy Director
Division of Insurance
Department of Commerce, Community, and Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered committee questions on HB 116.
REPRESENTATIVE TED EISCHEID
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 132.
MICHAEL BUCY, Staff
Representative Ted Eischeid
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Eischeid, prime
sponsor, read the sectional analysis on HB 132.
JEN GRIFFIS, Vice President of Policy & Advocacy
Alaska Children's Trust
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB
132.
ANDREW KUSHNER, Senior Policy Counsel
Center for Responsible Lending
Oakland, California
POSITION STATEMENT: Gave invited testimony on HB 132.
REVEREND ANDY BARTEL
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB
132.
ROBERT SCHMIDT, Director
Division of Banking & Securities
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
132.
TRACY RENO, Financial Examiner 4
Division of Banking & Securities
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
132.
SARAH OATES HARLOW, President
Alaska CHARR
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on SB 79.
ACTION NARRATIVE
3:17:19 PM
CO-CHAIR ZACK FIELDS called the House Labor and Commerce
Standing Committee meeting to order at 3:17 p.m.
Representatives Fields, Carrick, Hall, Coulombe, and Burke were
present at the call to order. Representatives Saddler and
Nelson arrived as the meeting was in progress.
HB 116-COMMERCIAL FISHING INSURANCE CO-OP
3:17:53 PM
CO-CHAIR FIELDS announced that the first order of business would
be HOUSE BILL NO. 116, "An Act exempting from insurance
regulation cooperative agreements entered into by two or more
persons engaged in commercial fishing for the purpose of paying
claims or losses."
3:17:59 PM
REPRESENTATIVE LOUISE STUTES, Alaska State Legislature, as prime
sponsor, introduced HB 116, as follows:
Before you is HB 116, an act exempting insurance
regulation cooperative agreements entered into by two
or more persons engaged in commercial fishing for the
purposes of claims or losses. This legislation was
brought forward by the [House Special Committee on]
Fisheries ... by request of the Joint Legislative
Taskforce on Evaluating Alaska's Seafood Industry, of
which I was a member.
The purpose this bill is to allow commercial fishermen
to form insurance pools to provide lower cost, easier
access to insurance for commercial fishermen. These
commercial fishermen-owned insurance pools already
exist in Alaska but are housed in an organization
based in Washington state, which already has the carve
out in their insurance code. This legislation simply
allows Alaska-based organizations to form here in
Alaska. HB 116 seeks to provide a more attractive,
lower-risk alternative for underwriters ... that
insure individual vessels, as well as lower costs for
our fishermen.
3:19:37 PM
MATT GRUENING, Staff, Representative Louise Stutes, Alaska State
Legislature, on behalf of Representative Stutes, prime sponsor,
gave the sponsor statement for HB 116 [included in the committee
file], which read as follows [original punctuation provided]:
House Bill 116 would allow for member-owned commercial
fishing insurance cooperatives based in Alaska to form
without being considered an insurer. Specifically, the
bill would allow commercial fishermen to enter into a
cooperative insurance agreement to pay claims arising
from liability or damage to a vessel without having to
comply with Title 21, the State's insurance code.
There are already three such insurance pools operating
in Alaska; however, they are based in Washington
State, which already has a carve out for commercial
fishermen in its insurance code. This legislation
would simply allow similar organizations based in
Alaska to form, pool their funds, and establish a
commercial fishing insurance cooperative.
Rising costs and availability of insurance serve as a
barrier to operating for Alaska's aging commercial
fishing fleet. Underwriters have been raising premiums
on individual vessels and have become increasingly
selective of which vessels they insure. Insurance
pooling can provide a more attractive, lower risk
alternative for underwriters, as well as lower costs
for our fishermen.
With operating costs at an all-time high and fishing
markets at an all-time low, House Bill 116 seeks to
provide lower cost insurance alternatives for Alaska's
commercial fishing
fleet.
3:22:54 PM
CO-CHAIR FIELDS opened public testimony on HB 116. After
ascertaining that there was no one who wished to testify, he
closed public testimony.
3:23:32 PM
REPRESENTATIVE COULOMBE asked for clarification that HB 116
would provide the opportunity to create cooperatives ("co-ops"),
but that it would not actually create the co-ops.
REPRESENTATIVE STUTES confirmed that was correct.
MR. GRUENING, in response to a follow-up from Representative
Coulombe on state contribution, replied that there would be no
capitalization requirement due to the Title 21 exemption. He
added that a critical mass would be required for pool solvency,
which would entail collecting enough interest, gathering the
capital, hiring a broker, and hiring an actuary to raise the
capital through the private market.
REPRESENTATIVE STUTES summarized that the proposed legislation
does not seek funds from the State of Alaska.
3:25:09 PM
REPRESENTATIVE CARRICK asked which specific statute in Title 21
of Alaska Statute (AS) doesn't allow fishermen to create a
fishing co-op. She asked if there are any specific examples of
insurance code in Washington state that reference fishing co-
ops.
MR. GREUNING replied that the decision was made after speaking
with the Division of Insurance after discovering the carve-out
in the Washington State Code.
3:26:08 PM
HEATHER CARPENTER, Deputy Director, Division of Insurance,
Department of Commerce, Community, and Economic Development
(DCCED) explained that the "scope of code" and "application of
title" is being amended in order to create pools without
following the rest of Title 21. She further explained that the
decision was made after feedback from legal counsel.
REPRESENTATIVE CARRICK further asked whether there were other
industries in Washington situated similarly to the fishing
industry.
MS. CARPENTER responded that she did not know the specifics of
the Washington State Code but added that there were other
industries that had pooling options.
3:28:00 PM
REPRESENTATIVE STUTES, in response to Representative Coulombe's
question, confirmed that HB 116 was at the recommendation of the
seafood task force.
3:28:43 PM
CO-CHAIR FIELDS asked if the Division of Insurance has any
concerns regarding the implications under HB 116.
MS. CARPENTER replied that the Division of Insurance is neutral
on the proposed policies of HB 116.
REPRESENTATIVE STUTES added that HB 116 does not guarantee that
fishermen would create a fishing cooperative, it would just
allow for them to create one.
3:29:56 PM
REPRESENTATIVE COULOMBE asked what "premium tax revenue" is as
it is mentioned in HB 116. She commented that she found it
"interesting" that the state would have to pay $72 million for
the insurance costs that would be created under HB 116,
particularly given the high cost of healthcare.
MS. CARPENTER answered that the Division of Insurance taxes all
insurance policies, bringing approximately $72 million into the
general fund. She explained that policies under Title 21 are
taxed. She noted that the Division of Insurance revised the
fiscal note to show a zero fiscal impact upon realization that
there would be no immediate loss.
3:31:32 PM
REPRESENTATIVE CARRICK asked whether there were inquiries about
"carve-outs" for other industry groups in Alaska, such as the
homebuilders.
MS. CARPENTER explained that the Division of Insurance has had
conversations about pooling insurance costs together.
3:32:40 PM
The committee took an at-ease from 3:32 p.m. to 3:33 p.m.
3:33:47 PM
CO-CHAIR HALL moved to report HB 116 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, HB 116 was reported from the House
Labor and Commerce Standing Committee.
3:34:23 PM
The committee took an at-ease from 3:34 p.m. to 3:36 p.m.
HB 132-LOANS UNDER $25,000; PAYDAY LOANS
3:36:23 PM
CO-CHAIR FIELDS announced that the next order of business would
be HOUSE BILL NO. 132, "An Act relating to loans in an amount of
$25,000 or less; relating to the Nationwide Multistate Licensing
System and Registry; relating to deferred deposit advances; and
providing for an effective date."
3:37:14 PM
REPRESENTATIVE TED EISCHEID, Alaska State Legislature, as prime
sponsor, presented HB 132 to the committee, beginning with
opening remarks, as follows:
HB 132 addresses the issue of payday lending in
Alaska, and, among other things, seeks to remove an
exception for payday lending that allows for this
specific subset lenders to issue high-interest rates,
short turnaround loans that can lead to a devastating
cycle of debt to Alaskan families. Prior to 2004,
payday lenders were subject to the same loan terms as
those that currently remain in place for other small-
dollar loans, but an exception for payday lenders,
added to statute in 2004, catalyzed a transition to
... a more problematic lender-consumer relationship.
HB 132 removes this exception and also implements
additional, limited common-sense protections for
Alaska financial products consumers.
REPRESENTATIVE EISCHEID began a PowerPoint [included in the
committee file], titled "Payday Loans HB 132," on slide 2, which
read as follows [original punctuation provided]:
In Alaska, payday loans are loans of $500 or less,
with a minimum loan term of two weeks. To ensure
repayment, borrowers must provide a postdated check or
direct access to their bank account as collateral
In an average year in Alaska:
- 15,000 Alaskans take out a payday loan
- $440 is the average payday loan amount
- 5.4 is the average number of loans each borrower takes
Nationally:
- Borrowers take an average of five months to repay
payday loans
- When a borrower can't repay their loan, the loan can
be rolled over, or a new loan can be created
REPRESENTATIVE EISCHEID identified various problems with payday
loans in Alaska, as shown on slide 3, which read [original
punctuation provided]:
Payday loans target the most vulnerable Alaskans -
those living paycheck to paycheck
Payday loan interest rates range from 194% to over
512% APR
For a $440 loan, it costs $127 just to keep up with
the first month's interest; to repay the loan in 5
months could cost more than $1,200, or almost 3 times
as much as the original loan amount
The high cost of these short-term loans can leave
families trapped in a cycle of chronic debt and
poverty
REPRESENTATIVE EISCHEID identified additional problems with
payday loans in Alaska shown on slide 4, which read as follows
[original punctuation provided]:
If credit card companies charged 400% APR, the average
Alaskan's credit card debt of $8,000, would end up
costing nearly $37,000 to pay off
Most payday loans are made online, by out of state
companies, extracting about $29 million from
Alaskans, and Alaska's economy
From 2017-2022, payday lenders garnished over $3.7
million from Alaskans' PFDs
2017 Texas study found that 45% of Veterans had taken
out payday loans, compared to 7% of the general
population
REPRESENTATIVE EISCHEID moved to slide 5 of the presentation and
noted that Alaska law already sets a 36 percent annual
percentage rate (APR) limit on other small dollar loans. He
further noted that 18 other states, including South Dakota, New
Mexico, Montana, West Virginia, and Nebraska have a 36 percent
rate cap that includes payday loans. He stated that at least
four states have implemented a ban on payday loans altogether.
He drew committee members' attention to slide 6 of the
presentation, which contained headlines regarding payday loans.
He stressed that the impact of Alaska's payday lending exception
on Alaska consumers is nonpartisan, affecting communities of all
kinds.
REPRESENTATIVE EISCHEID gave a summary of the effects of HB 132,
located on slide 7, which read [original punctuation provided]:
Removes an exemption allowing payday lenders to
be exempt from federal financing limitations
Treats payday lending like all other small loans in
the state
We need to protect all Alaskans and help safeguard
the economic well-being of families
REPRESENTATIVE EISCHEID deferred to his staff to read the
sectional analysis of the proposed legislation.
3:44:20 PM
MICHAEL BUCY, Staff, Representative Ted Eischeid, Alaska State
Legislature, on behalf of Representative Ted Eischeid, prime
sponsor, gave the sectional analysis on HB 132 [included in the
committee file], which read as follows [original punctuation
provided]:
Section 1. Amends AS 06.01.020(a) to remove payday
lenders from the list of financial institutions exempt
from federal financing limitations.
Section 2. Amends AS 06.01.050(3) to remove payday
lenders from the definition of "financial institution"
under state law.
Section 3. Adds new sections to AS 06.20.010:
c) Expands the definition of a lender to close
loopholes and prevents businesses from evading small
loan regulations.
d) Clarifies that a loan is considered to
originate in Alaska if the borrow resides in the state
and completes the transaction while physically
present.
Section 4. Amends AS 06.20 to allow the Department of
Commerce, Community and Economic Development to
utilize the Nationwide Multistate Licensing System and
Registry, manage the registration process and adopt
regulations for implementation.
Section 5. Amends AS.06.20.030(a) to enable applicants
to pay investigation expenses through the registry.
Section 6. Amends AS 06.20.030(b) to enable applicants
to pay licensing expenses through the registry. Makes
a licensing change that requires applicants to pay
$500 per branch, website, or mobile app location,
instead of a single office license, and $2000 for a
company license instead of a multiple office license.
Section 7. Repeal and Reenacts AS 06.20.090 to (a)
require applicants to submit separate applications for
each business location and (b) allow the department to
set application requirements, procedures, and
licensing periods.
Section 8. Amends AS 06.20.170 to have the department
conduct period examinations as needed instead of every
18 months.
Section 9. Amends AS 06.20.230 to simplify the
previous tiered interest rate structure for (a) loans
under $25,000 and (b) open-ended loans, creating a
uniform rate of 3% per month. Adds language that
requires interest rate calculations on payday loans to
consider only the relevant charged fees, costs, and
premiums as detailed in AS 06.20.260(a)(1)-(5).
Section 10. Amends AS 06.20.310 to render payday loans
with interest rates greater than 3% per month invalid.
Section 11. Amends AS 06.20 to add section 06.20.235
to prohibit payday lenders from threatening to
prosecute borrowers in the event of defaults.
Section 12. Amends AS 06.20.330(b) to exempt financial
institutions chartered under the National Bank Act or
Federal Credit Union Act. Eliminates the exemption
that allows pawnbrokers and loan shops where separate
and individual loans do not exceed $750 and $500
respectively to charge interest rates exceeding the
maximum rate established by AS 06.20.230.
Section 13. Amends AS 06.20.900 to define "registry"
as Nationwide Multistate Licensing System and
Registry.
Section 14. Amends AS 08.76.500 to subject payday
lenders to the same regulations as small loan
companies.
Section 15. Amends AS 45.45.020 to mandate interest
calculations include all service charges paid by the
borrower to ensure transparency in interest
calculations. "Service charge" is defined as fees
charged by the lender but doesn't include fees related
to delinquency.
Section 16. This section comprises a significant
number of repeals related to the elimination of the
carveout for payday lenders. Section 17 provides
for an effective date of July 1, 2025.
3:49:20 PM
CO-CHAIR FIELDS announced the committee would hear invited
testimony.
3:49:28 PM
JEN GRIFFIS, Vice President of Policy & Advocacy, Alaska
Children's Trust, gave invited testimony [included in the
committee file] on HB 132, which read as follows [original
punctuation provided]:
• The Alaska Children's Trust offers its strong
support for House Bill 132, which seeks to establish
reasonable consumer protections for payday lending
practices in Alaska.
As the statewide lead organization focused on the
prevention of child abuse and neglect, ACT fully
supports enacting legislation to prevent the long-
term, negative impacts on Alaskan families that can
result from high-interest small-dollar loans.
The detrimental impact of economic hardships and
poverty on family well-being is widely acknowledged,
serving as a major risk factor for child abuse and
neglect. Financial strain can have far-reaching
effects on family dynamics, amplifying stress,
anxiety, and frustration within households.
Parents may find it increasingly difficult to
provide for their children's basic needs, such as
food, a safe place to live, clothes, and medical care.
This scarcity of resources and the constant pressure
to become financially solvent can lead to increased
parental stress, increasing the risk of child abuse
and neglect.
To alleviate short-term economic hardships, Alaskan
families often rely on payday loans. However,
financial strain resulting from payday loans can both
cause and further exacerbate these challenges. The
appeal of payday loans lies in their easy
accessibility and quick cash disbursement. However,
these types of loans are not ways of building credit
and instead trap many Alaskans in a cycle of debt and
poverty.
In recent years, banks and credit unions have begun
to introduce alternatives to pay day loans with
reasonable interest rates, helping families build
credit instead of trapping them in poverty.
In 2020, neglect and medical neglect made up 75% of
all substantiated child maltreatment cases in Alaska,
illustrating how distinctly .notdefed economic hardship is
to Alaska's incredibly high rates of child abuse and
neglect.
The predatory lending practices connected to payday
loans also impact military and veteran populations. A
2018 study from Texas found that 45% of veterans take
out payday loans, compared with only 7% of the general
population, highlighting the increased risk to this
population.
While the Military Lending Act of 2007 instituted a
36% cap to protect active duty military members from
predatory lending practices, Alaska's veteran
population, which is 10% of the state's adult
population, does not have the same protection.
In January 2023, Mutual Aid of Anchorage, or MANA,
launched a six month pay day loan project, paying off
pay day loans for over 25 families. Through this
project they learned first-hand of the negative
impacts predatory lending has on Alaska's families.
They saw how these loans create not only economic
stress, but emotional stress for our most vulnerable
families.
House Bill 132 can help provide protection from
predatory lending by standardizing rational safeguards
for families who face financial instability and
ensuring payday loans are subject to a reasonable
maximum interest rate in line with other small-dollar
loans.
Thank you for your consideration and support of
House Bill 132.
3:52:44 PM
ANDREW KUSHNER, Senior Policy Counsel, Center for Responsible
Lending, gave invited testimony [included in the committee file]
on HB 132, which read as follows [original punctuation
provided]:
My name is Andrew Kushner and I am a senior
policy counsel at the Center for Responsible Lending.
CRL is a non-profit, non-partisan policy and research
organization dedicated to building family wealth
through curbing abusive financial practices. CRL is
affiliated with the Self-Help family of credit unions,
a national community development financial institution
that provides access to safe, affordable financial
services to low-income communities and borrowers.
I would like to make three points today and then
I am happy to answer any questions.
First, as the sponsor outlined so well, the harm
from payday and other high-cost loans is powerful and
undeniable. The industry's very business model is
trapping consumers in a cycle of debt. Nationally, 75%
of payday loan fees are generated by people stuck in
more than 10 loans a year. According to one study
from Vanderbilt University, borrowers who obtain a
payday loan are twice as likely to file for bankruptcy
as those who seek a payday loan but are denied. In
short, unaffordable credit is a feature, not a bug, of
the predatory lender business model.
Second, I want to provide a bit of the national
perspective on state policy responses to this problem.
36% interest rate caps are rapidly becoming the norm
across the country. We heard about the Military
Lending Act. Voters subsequently overwhelmingly
passed 36% rate caps in South Dakota, Colorado, and
Nebraska in 2016, 2018, and 2020, respectively. State
legislatures in Illinois, New Mexico, and Minnesota
then passed interest rate cap bills in recent years.
SB 39 would put Alaska in line with laws applicable to
active-duty military and in place in over a third of
the states.
No state that has outlawed payday lending has
ever gone back to reauthorized it. That speaks
volumes.
Finally, I want to speak for a minute on section
4 of the bill, the anti-evasion provision. You may
hear industry trade associations describe section 3 as
a novel, outlier provision. It is not. It says simply
that, if an online lender routes its loans through a
bank but otherwise controls the lending program, the
online lender is subject to Alaska law. This is a
commonsense approach to the problem of online lenders
partnering with out-of-state banks to try to evade
Alaska law. The language in that provision is
identical to that passed in Maine, New Mexico,
Washington, Illinois, and Connecticut in recent years
and is supported by lender trade associations that
commit to lending at or below 36%.
Thank you for your time and consideration and I'm
happy to answer any questions.
3:56:57 PM
REVEREND ANDY BARTEL gave invited testimony in support of HB
132. He stated that the Alaska Conference of the United
Methodist church had unanimously adopted resolutions in the past
two years in support of HB 132. He asserted that HB 132 does
not favor any one political perspective. He stated that his
church believes: "Financial institutions serve a vital role in
society. They must guard, however, against abusive and
deceptive lending practices that take advantage of the neediest
among us for the gain of the richest. Banking regulations must
prevent the collection of usurious interest that keeps people in
cycles of debt." He asserted that payday lending is predatory
lending that takes millions of dollars from both the people of
Alaska and the local economies in Alaska. He reported that
Credit Union One, Spirit of Alaska Credit Union, and Wells Fargo
all offer short-term small loans with interest rates below the
proposed 36 percent cap under the proposed legislation. He
stated that he was previously a pastor in South Dakota, a
conservative state that had enacted legislation similar to HB
132. He stated that subsequent studies have shown that South
Dakota has only benefited from the implementation of a 36
percent payday cap. He reported that South Dakota saves $81
million a year on fees that can be spent on "housing, food,
transportation, medicine, and school supplies." He asserted
that HB 132 would make a real, positive change for the most
impoverished individuals in Alaska. He thanked the committee
members for their time.
4:00:04 PM
REPRESENTATIVE CARRICK asked what the average interest rate of
payday loans in Alaska is and asked what the total annualized
interest amount is. She asked if Alaska would see a number of
payday lenders go out of business as a result of HB 132.
4:00:48 PM
ROBERT SCHMIDT, Director, Division of Banking & Securities,
Department of Commerce, Community & Economic Development
(DCCED), replied that the total annualized interest amount is
approximately 400 percent a year.
4:01:14 PM
TRACY RENO, Financial Examiner 4, Division of Banking &
Securities, Department of Commerce, Community & Economic
Development, cited annual reports from licensees during 2023,
reporting that the average payday loan was $443.14, the average
customer took out 5.56 payday loans, and the interest for the
average loan could be up to $66.47 in addition to the $5
origination charge.
MS. RENO, in response to a follow-up question from
Representative Carrick, answered that payday loans are a maximum
of $500 with a minimum payment as early as 14 days. She
additionally stated that the average interest rate was typically
between 400 and 425 percent. She explained that HB 132 would
effectively remove payday lending in Alaska and the existing
payday lenders in Alaska could apply as a small loan company,
which currently has an interest rate of 36 percent with a tiered
calculation of interest rate. She further stated that HB 132
would allow 3 percent flat monthly and 36 percent flat annually.
She surmised that interest rates would decrease from the average
of between 400 and 425 percent to 36 percent.
REPRESENTATIVE CARRICK asked whether states with similar
legislation enacted have had payday lending companies cease
business.
MR. SCMIDT replied that payday lending is illegal in North
Carolina, Pennsylvania, Washington D.C., Arizona, Arkansas,
Connecticut, Maryland, Massachusetts, Vermont, New York,
Georgia, New Jersey, and West Virgina. He further stated that
11 states have payday loans with interest rate caps. He stated
that he was unaware of data showing payday lenders going out of
business when payday lending is exempted from the cap. He
stated that the fiscal note does assume that a percentage of
payday lenders would stop conducting that line of business and
noted that many payday lenders also conduct other kinds of
businesses, such as pawnshop loans.
4:05:43 PM
CO-CHAIR HALL asked if there is any way to know how many people
in Alaska are participating in payday loans and asked if there
is any way to determine how much of the annual cost of payday
loans is from interest.
MR. SCHMIDT answered that 7,085 people in 2023 received payday
loans that totaled $17.45 million, which is reported by
licensees.
4:07:22 PM
REPRESENTATIVE SADDLER asked what constitutes mobile application
("app") location, as is mentioned in the sectional analysis for
HB 132. He asked what "as needed" means, as is mentioned in
Section 8 of the sectional analysis, and if the proposed
legislation would expose people that borrow from payday lenders
to "risks."
MR. SCHMIDT explained that a mobile app is a single license. He
noted that there could be several different apps, or "brands,"
owned by one company. He further noted that two different apps
owned by one company would each have its own license, but the
company under which the apps fall would apply for a single
application fee. He further stated that a "business location"
refers to distinctive branches in one location.
MR. SCHMIDT, in response to Representative Saddler's question on
risks, stated that examinations conducted by calendar and not by
risk would not allow [DCCED] to focus its attention on areas
believed to pose the greatest risk to consumers. He described
that there was a large scope of entities that he and his staff
examined, reporting that he had four staff members that
currently examine approximately 500 businesses. He stated that
DCCED examines 2 percent of all mortgage lenders per year.
4:12:54 PM
CO-CHAIR FIELDS asked Mr. Schmidt to elaborate on what a "pawn
shop loan" is and asked if there are other options for consumers
within the rates confined under HB 132.
MR. SCHMIDT answered that pawn shop loans are regulated by the
Division of Corporations, Business, and Professional Licensing
and explained that the loans are essentially loans on which a
pawn shop has a right to claim collateral. He stated that he
was not in a position to comment on consumer risks or benefits.
He explained that there are a number of local banks where a
person could apply for and utilize a small loan akin to a payday
loan.
4:15:15 PM
REPRESENTATIVE COULOMBE asked whether individuals would be
required to have a bank account to access loans at Wells Fargo
or a credit union, for example. She further asked the
justification for the exemption described in the presentation
that allowed payday lenders to be exempt from federal financing
limitations.
MR. SCHMIDT replied that an individual must have a bank account
to apply for a payday loan, as a postdated check or instructions
for direct deposit are required. He stated that he did not have
an answer to her second question.
4:16:24 PM
REPRESENTATIVE CARRICK asked what the average debt is of a
person that is participating in payday lending.
REPRESENTATIVE EISCHEID answered that he doesn't have any
specific information regarding the average debt of a person that
utilizes payday loans and noted that, with the limitations and
high interest rates of payday loans, it is very easy for an
individual to fall off of a "fiscal cliff."
4:18:33 PM
MR. KUSHNER responded that he did not have a statistic for
Representative Carrick's question. He asserted that the problem
with payday loans is that they "effectively create their own
future demand," describing the cycle of reborrowing in debt
where an individual who borrows a payday loan is much more
likely to borrow again in the future. He emphasized
Representative Eischeid's point, noting that the decision to
"take out a $500 loan can quite quickly, by the end of the year,
balloon into $3,000 to $4,000 debt that lead[s] to getting your
car repossessed."
REPRESENTATIVE CARRICK asked whether it was a fair statement to
say that the "average debt of someone who is regularly taking
out payday loans is probably much higher than that average
$8,000 of credit card debt that Alaskans have on a regular
basis."
MR. KUSHNER responded that he did not know.
4:19:58 PM
REPRESENTATIVE SADDLER asked if payroll cards might be used as
payday loans and if one could theoretically go into debt with a
payroll card.
MR. KUSHNER explained that a payroll card is not a lending
product, like a payday loan. He also noted that some payroll
cards have high fees that could eat into someone's finances. He
suggested that they could be a good option for unbanked
individuals, on the condition that the fees are limited.
MR. SCHMIDT, in response to Representative Saddler's question on
Nationwide Multistate Licensing [System] (NMLS), replied that
Congress, after the 2008 housing crisis, passed the [Secure] and
Fair Enforcement for Mortgage [Licensing] Act (SAFE Act), which
required states to enact their own mortgage licensing statutes
and required a centralized repository for mortgage data. He
stated that the system was so efficient that it was expanded to
include many other financial service industries. He stated that
institutions apply to their office via NMLS. He explained that
it was a streamlined and centralized platform for handling
applications, various licensing issues, and regulatory
functions. He offered his belief that all states utilize NMLS.
MR. SCHMIDT clarified that the administration was neutral on
payday loans but noted that the Division of Banking & Securities
would like to see modernizing language for the Small Loan Act,
which dates back to territorial law in 1955 Alaska. He
emphasized that the provisions of the Small Loan Act were
difficult to understand and utilization of the NMLS would
benefit everybody.
REPRESENTATIVE SADDLER asked for confirmation that NMLS is a
registry for lenders, not borrowers.
MR. SCHMIDT confirmed that is correct.
4:25:22 PM
CO-CHAIR FIELDS thanked the invited testifiers
[HB 132 was held over.]
SB 79-PAYMENT OF WAGES; PAYROLL CARD ACCOUNT
4:25:39 PM
CO-CHAIR FIELDS announced that the final order of business would
be SENATE BILL NO. 79, "An Act relating to wage payments."
4:26:07 PM
CO-CHAIR FIELDS opened public testimony on SB 79.
4:26:24 PM
SARAH OATES HARLOW, President, Alaska Cabaret, Hotel, Restaurant
and Retailer's Association, Inc. (Alaska CHARR), briefly spoke
about CHARR and reminded the committee she had previously
testified that the hospitality industry continues to face
significant ongoing challenges to business operations and cost
of labor, one of which is interchange fees, also known as "swipe
fees," required of business owners by credit card networks on
the taxes collected. She said restaurants alone in Alaska are
paying over $6.2 million in credit card swipe fees annually.
She highlighted that one CHARR member spent over $50,000 on
interchange fees solely on alcohol tax collected on behalf of
the Municipality of Anchorage (MOA). She recommended an
amendment to SB 79 that would restrict interchange fees on taxes
and tips thus helping thousands of Alaska-owned establishments
and keep millions of dollars in the state.
4:30:26 PM
CO-CHAIR FIELDS asked Ms. Oates Harlow if she had any
information regarding other CHARR members and the amount they
have paid in interchange fees.
MS. OATES HARLOW replied that there were many members of CHARR
that planned to submit written testimony regarding the amount
that they spend on interchange fees for taxes and tips.
4:31:44 PM
CO-CHAIR FIELDS, after ascertaining that there was no one else
who wished to testify, closed public testimony on SB 79.
4:32:10 PM
CO-CHAIR FIELDS thanked the testifiers and delivered committee
announcements.
[SB 79 was held over.]
4:32:16 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:32 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB79 Sectional Analysis ver. A 02.05.25.pdf |
HL&C 3/24/2025 3:15:00 PM SL&C 2/7/2025 1:30:00 PM |
SB 79 |
| SB79 Sponsor Statement ver. A 02.05.25.pdf |
HL&C 3/24/2025 3:15:00 PM SL&C 2/7/2025 1:30:00 PM |
SB 79 |
| SB79 Fiscal Note-DOLWD-WH 01.31.25.pdf |
HL&C 3/24/2025 3:15:00 PM SL&C 2/7/2025 1:30:00 PM |
SB 79 |
| SB79 Supporting Documents-Benefits of Payroll Cards by ADP.pdf |
HL&C 3/24/2025 3:15:00 PM SL&C 2/7/2025 1:30:00 PM |
SB 79 |
| SB79 ver A.pdf |
HL&C 3/24/2025 3:15:00 PM SL&C 2/7/2025 1:30:00 PM |
SB 79 |
| HB 116 Letters of Support 3.17.25.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 116 |
| HB 116 Fiscal Note #1 CED 3.11.25.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 116 |
| HB 116 Sponsor Statement v. I 3.1.25.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 116 |
| HB 116 v. I 2.26.25.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 116 |
| HB116-DCCED-DOI-03-18-25.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 116 |
| HB 132 - Public Comment Received 3.24.26.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |
| HB132-DCCED-DBS-03-14-25.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |
| Payday loans Final L&C 03242025.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |
| HB0132A.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |
| HB 132 Sponsor Statement.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |
| HB 132 Sectional Analysis 3.20.2025.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |
| SB 79 Supporting Document-ADP Answers to Questions In House Labor & Commerce Committee 3.21.2025.pdf |
HL&C 3/24/2025 3:15:00 PM |
SB 79 |
| HB132 Amendment N.3 with Conceptual AM 1 and 2, ADOPTED HLC 3.27.2025.pdf |
HL&C 3/24/2025 3:15:00 PM |
HB 132 |