Gov. Scott Walker's budget proposal to exempt rent-to-own companies from having to disclose interest rates to customers may end a long-fought battle for such businesses, who have spent close to $900,000 since 2003 lobbying state lawmakers on the issue.
Rent-to-own companies are currently regulated as credit lending institutions, which Walker's measure seeks to change. Critics argue that it would allow the stores to hide important information from customers, who are mostly poor, while supporters contend that rentals are not credit transactions and that displaying an interest rate for a product is inaccurate. The passage of the measure would mean victory after more than a decade-long push by Wisconsin rent-to-own companies, who have seen their efforts fail at the last minute, a number of times.
According to state lobbying records, which only go as far back as 2003, the Wisconsin Rental Dealers Association (WRDA) has spent large sums to craft legislation and persuade state lawmakers of its validity.
"There's a lot of language we're working with, and there's a lot of expense built into getting just the right wording," says Jeff Lebakken, who owns several rent-to-own stores and heads the Wisconsin Rental Dealers Association. He says he spent months working with members in both chambers, taking meetings with anyone he could. "We were trying to educate the legislature on the industry."
In addition to lobbying, the rent-to-own industry, including Lebakken and executives from Rent-a-Center, has given $74,000 to state candidates since 1998, according to data from the Sunlight Foundation, a non-profit that tracks political spending. Most of the donations went to Republicans.
In the 2003-04 and 2005-06 sessions, the Wisconsin Rental Dealers Association spent more than $600,000 pushing its legislation. In March 2006, after a bill (AB 587/SB 268) made it through both chambers, then-Governor Jim Doyle, a Democrat, vetoed it.
After that, Lebakken says, the Association took a break. "Doyle was the one who helped us get it passed through the Senate, and then for him to veto the bill just blew my mind. In fact, the bill was written in his office." The group's spending dropped sharply during the 2007 session and stopped completely in 2009. "There was no sense that making an effort would do any good after he vetoed the bill," says Lebakken.
Doyle could not be reached for comment.
In 2011, Walker, a Republican, revived the group's hopes of getting a favorable bill signed. It renewed its lobbying efforts to the tune of $76,000 in the 2011 session. Rent-a-Center, which had collaborated with Lebakken in the lobbying effort before, also began lobbying as a separate entity, dropping an additional $150,000.
Some groups lobbied against the 2011 bill (AB 582), including the Wisconsin Public Interest Research Group and Legal Action of Wisconsin, though they were drastically outspent by the rent-to-own groups.
Despite having the upper hand, in March of 2012, the Association's efforts failed again. After passing the Assembly, the bill died in committee in the Senate.
Now that the measure has been included in this year's budget proposal, Lebakken is confident that something will pass, either as part of or apart from the budget. "We feel that the supporters we have in the legislature, Republicans and Democrats, are still there, and that we will get it passed this time."
But while Lebakken thinks it is only a matter of time before the WRDA succeeds, the provision may not have enough support to pass both chambers.
Democrats, currently the minority in both the Senate and the Assembly, are mostly against the measure. In an email statement, Democratic leader Sen. Chris Larson said, "Deregulating rent-to-own companies that prey on those fighting to enter the middle class is immoral and should be removed from the budget."
Even Senate Republicans are not united in favor of Walker's plan. Glenn Grothman, the Senate Assistant Majority Leader from West Bend and a member of the Joint Committee on Finance, has voiced strong opposition, calling the rent-to-own industry "sleazy." If other senators choose to stand with Grothman, the provision may have a hard time staying in the budget.
According to the most recent disclosures, Rent-a-Center started lobbying on the issue in February, shortly before Walker introduced his budget, though it won't have to disclose how much it spends until July.