Dunleavy vetoes bills capping payday loans, expanding Sitka school’s ability to seek project funds

Gov. Mike Dunleavy speaks during a press conference at the Alaska State Capitol on April 17, 2025. (Mark Sabbatini / Juneau Independent)

A payday loans bill capping interest rates and fees at 36% was vetoed this week by Gov. Mike Dunleavy. The governor also vetoed a bill expanding the ability of Sitka’s Mt. Edgecumbe High School to receive state maintenance funds.

Senate Bill 39, capping interest and fees on consumer loans up to $25,000, passed the Alaska Legislature with 38 of 60 House and Senate members voting in favor, mostly along majority-minority caucus lines. Supporters argued it would deter predatory lending, but Dunleavy sided with opponents who questioned the legality of the bill and stated it would restrict options for people who need credit most.

"SB 39 replaces the State's existing small-loan framework with substantially reduced rate limits and new compliance requirements," Dunlevy wrote in a short veto message Tuesday. "These changes would reduce short-term credit options — particularly for those without access to traditional banking services — while creating enforcement challenges for the State."

About 15,000 Alaskans take out short-term payday loans at interest rates as high as 521%, according to a sponsor statement by Sen. Forrest Dunbar (D-Anchorage), who introduced SB 39.

"Many do so under duress; they must provide for not only themselves, but also their family, meaning the number of affected Alaskans is even higher than the roughly 15,000 who take out the loans," Dunbar wrote. Furthermore, "because the 13 licensed payday loan lenders are all headquartered out of state, these companies represent a pipeline directing Alaskan wages out of the state with each loan repayment."

More than a dozen states have limits similar to SB 39 and a federal cap exists for military service personnel.

AARP Alaska, in written testimony supporting the bill May 9 to the House Finance Committee when SB 39 was nearing its final passage, stated "for vulnerable older adults, high-cost installment loans are more likely to be a hindrance than a help."

"Older borrowers who fall into a cycle of debt have few options to address that debt and return to a sound financial footing without spending down limited assets," the AARP statement added. "Older borrowers are often unable to return to work or take on more hours at work in an attempt to get out of debt. They may also face additional obligations such as family caregiving that require significant contributions of time and money."

"Additionally, fixed regular income from Social Security, pension and veteran disability payments make older adults and veterans attractive targets for predatory lenders such as payday lenders."

Among the financial business officials opposing SB 39 as misguided was Wendy Gibson, general manager of the Utah-based Check City, which is an Alaska-licensed lender.

"Although positioned as a consumer-friendly bill to reduce the cost associated with short-term loans, its passage amounts to a wholesale prohibition of licensed short-term lending in the state of Alaska," Gibson wrote. "As history teaches us, prohibitions never work. If passed, legitimate and licensed short-term lenders will no longer offer regulated lending in Alaska. No state-licensed lenders or banks will offer short-term loans; the only entities that will offer loans are those who have no regard for Alaska law."

Also vetoed by Dunleavy on Tuesday was House Bill 174, allowing Mt. Edgecumbe High School to be included in a statewide ranking list for school maintenance projects. Currently the school’s maintenance, because it is a boarding school that enrolls students from rural communities throughout the state, is overseen by the Alaska Department of Transportation and Public Facilities.

HB 174 passed the Legislature with 54 of 60 members voting in favor. Dunleavy, in his veto message, stated the bill "diminished the equity across school districts that is provided by the Fund and commits the state to a local housing obligation, diverting already scarce dollars away from the critical classroom repairs and complicating grant rankings.”

The bill’s sponsor, Rep. Robyn Niayuq Burke (D-Utqiagvik), stated the veto "is more than a line-item decision, it is a direct blow to the educational aspirations of rural and Alaska Native students and a dismissal of an overwhelming bipartisan consensus." She stated the bill would have put the Sitka school on a level playing field when seeking project funding and the Dunleavy administration never raised concerns about the bill during the session.

"Because Mt. Edgecumbe is in Sitka, vetoing its funding also risks forcing the local community to shoulder unexpected costs." Burke wrote in a prepared statement. "That is patently unfair when Sitka residents already pay taxes to operate their own schools. The Governor’s action punishes a district that had no say in Mt. Edgecumbe’s state-run structure, while simultaneously short-changing students from every corner of Alaska who depend on the boarding school."

• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.