JEFFERSON CITY, Mo. (AP) -- Supporters of a Missouri initiative limiting payday loans vowed to press forward with their petition drive Thursday despite a court ruling striking down the ballot title because it was "likely to deceive" people.
Cole County Circuit Judge Dan Green invalidated the wording that has appeared on the petition sheets, calling into question the legality of thousands of signatures collected from registered voters just one month before the May 6 deadline to submit them to the secretary of state's office.
Without time to start from scratch with new petition sheets, initiative supporters said they planned to press ahead and hope that state officials -- and the courts -- allow the signatures to be counted and the measure to appear on the November ballot. Supporters said they already have gathered nearly 100,000 signatures, which would be more than needed if all the signatures are determined to be valid.
"We are proceeding at full speed to complete our signature gathering effort to qualify the ballot. We are going to go boldly forward to win this campaign," the sponsoring group, Missourians for Responsible Lending, said in a written statement.
But opponents cheered the court ruling as a potential death knell for the initiative.
Missouri law says that "signatures on petition pages that do not have the official ballot title affixed to the page shall not be counted as valid."
As a result of Green's ruling, "the old signatures can't count, and they're going to have to start again with the new language," said Kansas City attorney Eddie Greim, one of several attorneys who challenged the initiative on behalf of payday loan operators and other short-term lenders. "I just don't think there's time."
Green ruled that the initiative summary prepared by Secretary of State Robin Carnahan's office was "insufficient, unfair and likely to deceive voters" because it said the measure would "limit the annual rate of interest, fees, and finances charges" without specifying the actual limit being proposed. Green rewrote the summary to say it would "allow annual rates up to a limit of 36 percent, including interest, fees and finance charges."
The judge also directed Auditor Tom Schweich's office to prepare a new financial estimate for the measure. The original estimate said state government could lose $2.5 million to $3.5 million, but Green ruled that failed to take into account a certain category of short-term lenders who might also lose business and trigger an even greater reduction in tax revenues.
Schweich said his office could write a new financial estimate fairly quickly.
A Carnahan spokesman defended the original summary and said the office is considering whether to appeal Thursday's ruling.
Payday loans give borrowers money in exchange for a check that is cashed on their next payday. Other types of short-term loans are secured by vehicle titles or other means. The charges can mount, because borrowers can roll the loans over several times.
According to a January 2009 Missouri Division of Finance study, the average payday loan was for $290 and the average annual interest rate was 431 percent.
Those involved in the short-term loan industry say an annual interest rate cap of 36 percent could force them out of business, because the rate would not allow them to make enough money to cover their costs.
"There are times, when people need a short-term loan for very legitimate reasons, and there are highly regulated lenders out there who fill that need," said Jefferson City attorney Chuck Hatfield, who represented some of the plaintiffs challenging the ballot initiative. "The current regulations sufficiently protect the consumers."
Critics contend Missouri has some of the most lenient lending limits among the states that allow payday loans.
"They're preying on people who are in desperate financial situations," said the Rev. James Bryan, of Columbia, a retired Methodist pastor who is the treasurer for Missourians for Responsible Lending. "It's really a scourge on our society that we've allowed it to go this far."
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