[News 8/15] Maryland’s budget crunch

[Md.] You knew Maryland was facing a $1.4 billion budget shortfall, but you may not know that the shortfall is “approximately 10% of the state’s ‘general fund’ budget, which is the source of funds for most state agencies, and education and health funding. It is also the source of most state funding or payments to Maryland’s nonprofit service organizations.” (MarylandPolicy.org)

Today we learn that the O’Malley Administration is eyeing slots as a revenue generator. (WaPo, 8/15)

The Ford Foundation has selected a dark-horse candidate with little experience in institutional philanthropy as its new president.” “Increasingly…high-profile nonprofit jobs are going to people who have done well in the business world or in politics, a reflection on the pressure on charities and foundations to become more accountable.” (NYTimes, 8/15)

The payday loan industry fights back (WaPo, 8/15). Last month, the D.C. Council voted to cap payday loan rates to bring them in line with banks. But, wouldn’t you know it, the payday loan stores want to keep charging 349 to 550 percent, trapping people in a vicious cycle of debt. “[The] customer, who generally borrows $100 to $500, has difficulty repaying it and must renew the loan for a fee.” Since the industry has now launched an ad blitz, some facts on this need to be spread far and wide. Per the Center for Responsible Lending:

99 percent of payday loans turn into long-term debt. The average borrower renews a loan eight times per year.

From the WaPo editorial board:

It is instructive that Congress, appalled by stories of soldiers and their families hobbled by debt, voted last year to put in place a 36 percent cap on payday loans for military personnel. At present, some 12 states, including Maryland, have moved against payday lending. One reason the industry is so alarmed by the prospect of the D.C. regulations is that they could have a ripple effect: Virginia came close to imposing restrictions this year. No doubt capping interest rates will cause some firms to stop doing business. But the experience of states such as North Carolina has shown that there is no adverse impact on consumers and that more responsible forms of lending fill the gap. [emphasis mine]
(WaPo, 8/1)