Mercer: Union-Fee Proposal Could Override Rate-Cap Initiatives

Last updated on 2015-09-19

Update 2015.09.19 00:03 CDT: After I posted this article, Bob Mercer corrected his article to state that the Local 49 proposal is an initiated measure and not a constitutional amendment. He thus revised his article to reflect more uncertainty over the impact of the Local 49 measure on the payday lending caps. My text below reflects my response to his original article, not the revised one that now appears on Mercer’s blog.

When Attorney General Marty Jackley released his explanation of the very broad and very brief proposal to allow organizations to charge fees for their services, its brevity and apparent redundancy (what? organizations can’t charge fees for their services?) made me suspicious. My conversation Tuesday with Jason George, special projects director for the International Union of Operating Engineers Local 49, assuaged my suspicions with an explanation that his South Dakota union members intend to use this measure to challenge misperceptions about unions and fight for their right to be paid for the services they provide to non-union workers.

But now Bob Mercer points out a possible fly in the union ointment: Local 49’s fee proposal could torpedo the payday-lending rate-cap initiative!

Then there are the two measures that are directly about payday lending. One is a proposed initiative that would set a 36 percent cap on annual interest and fees. The other is a proposed constitutional amendment that appears to set an 18 percent cap but also would allow a lender to reach any other agreement with a borrower, essentially making the 18 percent cap irrelevant. In this instance, voters could approve one or both of the payday ballot measures. The payday constitutional amendment likely would nullify the payday initiated law if both pass, and that would void the 36 percent cap because it would only be a law. The constitution overrides laws.

The union’s measure wouldn’t take effect until July 1, 2017, if it passes. On that date, it would seem to override both payday measures [Bob Mercer, “Two Big Questions About Current Ballot Measures,” Pure Pierre Politics, 2015.09.18].

Interesting possibility… but from what I can read, not accurate. Let’s look at the text of the Local 49 proposal:

Notwithstanding any other provisions of law, an organization, corporate or nonprofit, has the right to charge a fee for any service provided by the organization [proposed ballot measure, sponsored by Scott Niles, released by Attorney General Marty Jackley, 2015.09.04].

The measure says organizations, including businesses, have the right to charge a fee. The measure does not say that organizations may charge any fee they want. The measure does not preclude the regulation of that fee. With respect to the union fees Local 49 would seek, this measure would not bar the state from saying to unions, “You can charge non-members a ‘fair-share’ fee for contract negotiations, but that fee must be less than the overall dues that you charge members for that and other union services.”

Similarly, the Local 49 initiative would not stop the state from saying to payday lenders, “Sure, you can charge a fee for lending money, but that fee, on top of whatever interest you charge, can’t exceed 36% APR.”

Even if the union-fee proposal would affect the extent to which we can regulate payday lenders, the measure would not have the power to override the fake 18% rate cap proposal. Mercer mistakenly refers to Local 49’s proposal as a constitutional amendment. The Secretary of State’s website had listed Local 49’s measure under potential constitutional amendments, but this noon I find the Secretary has corrected that error and lists the measure under potential initiated measures. The Attorney General’s explanation and the text submitted by Local 49 rep Scott Niles both state that the measure is an initiated measure, not a constitutional amendment. Local 49’s proposal would thus not supersede a constitutional amendment like the nefarious 18-percenters’ deceptive proposal…

…which brings us to another interesting constitutional question. Local 49’s George told me the point of their initiated measure is not to unravel South Dakota’s right-to-work laws. Mercer nonetheless calls the measure “an attempt to overturn part of South Dakota’s constitutional right to work.”

“Right-to-work” language is indeed in the state constitution:

No person shall be deprived of life, liberty or property without due process of law. The right of persons to work shall not be denied or abridged on account of membership or nonmembership in any labor union, or labor organization [South Dakota Constitution, Article 6, Section 2].

Hmmm… is a person’s right to work abridged if a condition of their work is paying a fair-share fee to the union that is required by federal law to represent that person in contract negotiations? If so, does Article 2, Section 6 negate the law Local 49 would pass?