Gov. Scott Walker is not talking about why he inserted a provision loosening regulations on “rent-to-own” businesses into the state budget.
But consumer advocates, religious organizations, Democrats and even some Republicans are howling that the provision would allow the outlets to exploit the poor by not revealing the exorbitant interest rates they charge customers for furniture and appliances. Under current state law they are required to disclose their rates.
The diverse coalition was on display last week at the Capitol, where one of the Legislature’s staunchest conservatives, Sen. Glenn Grothman, R-West Bend, teamed up with the Wisconsin Catholic Conference and the Wisconsin Public Interest Research Group (WISPIRG) to urge the policy be stripped from the budget.
Many are also pointing out that putting the rent-to-own provision in the budget runs directly counter to Walker’s campaign pledge to not use the budget to advance non-fiscal policies.
Tom Evenson, the governor’s spokesman, did not respond to multiple requests for comment. He also declined to comment on the issue to the Milwaukee Journal Sentinel in April. Bill Lueders of the Wisconsin Center for Investigative Journalism was not able to get Evenson to address the policy items in the budget either; the spokesman instead responded to such questions by crediting the governor with turning a deficit into a surplus and moving Wisconsin forward.
Historically, governors have stuck controversial policies into the budget so that legislators don’t have to vote separately on those issues. Ultimately, many legislators who complain about the practice will nevertheless support the budget when it comes to a vote.
Grothman, who sits on the Joint Finance Committee, the panel charged with crafting the final budget, is trying to round up the necessary votes to strip out the rent-to-own policy change, but it will likely be a tough battle.
Sen. Luther Olsen, R-Ripon, said before the JFC met on Wednesday that he would support removing the item from the budget. The other 10 Republicans on the committee, however, do not seem interested in talking about the issue.
“We’re not taking that up today,” said Sen. Sheila Harsdorf, R-River Falls, whom I tried to talk to as she walked into the committee hearing. Rep. Dean Knudson, R-Hudson, similarly evaded the question as he walked to his seat. The other GOP members on the committee did not respond to calls requesting comment on the issue.
Although some of the governor’s policy proposals, such as the expansion of school vouchers, have provoked strong opposition from Democrats and moderate Republicans, Walker can usually count on strong vocal support from conservative allies. Almost nobody, however, seems to be putting their neck out for the rent-to-own industry.
“They hide it in the budget and nobody defends it,” said state Rep. Gordon Hintz, D-Oshkosh, who worked with Grothman last session to defeat an attempt to deregulate the rent-to-own industry. “The fact that it’s mid-May and we’ve heard nothing about it — where is the robust defense of the rent-to-own industry?”
The closest thing resembling a defense was from state Rep. John Nygren, R-Marinette, who argued that such businesses could be helpful to free agents signed by the Green Bay Packers. “They don't know how long their contracts are going to last,” he told Wisconsin Public Radio. “They don't go out and buy the furniture and stuff. They rent it.”
Of course, renting and “renting-to-own” are two very different things. An exorbitant interest rate is not attached to the former.
So why is the governor pushing the change?
“I can only guess,” said Grothman.
What’s the guess?
“I can’t tell you that,” he responded.
However, Mike Mikalsen, chief-of-staff to state Rep. Steve Nass, R-Whitewater, one of the few Republicans who have opposed rent-to-own deregulation in the past, said the policy was made entirely as a favor to Ashley Furniture, a Wisconsin-based manufacturer of low-cost furniture that supplies many of the products in rent-to-own outlets.
Ashley, a large state employer, is not registered to lobby this session, but last session it reported spending $94,000 lobbying the Legislature just on the rent-to-own issue.
The other big backer of the measure is Rent-A-Center, a rent-to-own chain based in Plano, Texas. Last session it reported spending $192,000 lobbying the Legislature. Representing its interests is one of the top lobbyists in town, Eric Petersen, who, in addition to having an impressive array of powerful corporate interests on his client list, seems to be the go-to guy for stigmatized interest groups — payday lenders, tobacco companies, bail bonds, to name a few.
But unlike the payday loan industry, which in recent years has flooded legislative campaign coffers with contributions, the rent-to-own lobby does not appear to have spent heavily in recent elections.
According to data compiled by the Wisconsin Democracy Campaign, the industry contributed $14,000 to legislative candidates from 2009 through 2012. The only legislator who received significant funding was Sen. Terry Moulton, R-Chippewa Falls, whose western Wisconsin district is home to Lebakken’s, a large rent-to-own chain. Moulton received $3,000.
But opponents suggest the rent-to-own policy change is being pushed in the expectation of a generous reward come campaign season.