On Wednesday, Alaska Gov. Mike Dunleavy vetoed a bill that would have placed caps on all small-dollar loans, a move that conservatives say preserves Alaskans’ right to take predatory payday loans with interest rates topping 500%.
The legislation, Senate Bill 39, would have placed a 36% cap on all small-dollar loans in Alaska, akin to caps the federal government places on loans to military members. Under current law, Alaska’s payday loan companies can offer uncapped rates on loans of $500 or less, a move that advocates say allows people to get trapped in cycles of debt.
The move has been long advocated for by the Alaska Public Interest Research Group, a nonprofit consumer advocacy group, that found payday lenders in the state offer rates between 194% and 521% on loans under $500. And while such loans are typically framed as emergency one-time help between paychecks, they found that once a person takes out such a loan, they’re much more likely to take out additional loans, frequently to pay off old loans.
The group condemned the governor’s veto in a prepared statement.
“This bill is a commonsense, multipartisan effort to end a debt trap that has harmed our communities for over 20 years,” said Claire Estelle Lubke, AKPIRG Economic Justice Lead. “Instead of siding with Alaskans, the Governor chose to protect an industry that profits from financial insecurity. Payday loans are not an acceptable form of credit for our communities.”
In a two-sentence statement accompanying his veto, he wrote, “These changes would reduce short-term credit options — particularly for those without access to traditional banking services — while creating enforcement challenges for the state.”
The enforcement problems were not explained in the message, nor were they raised during the bill’s time in the Legislature.
However, the message is largely similar to what conservative political groups like Independent Women’s Voice — a right-wing think tank that aims to mask right-wing talking points in centrist messaging — have said while lobbying against the bill, arguing that capping rates leaves people with poor credit fewer options to get trapped in unmanageable debt.
“This is government overreach,” said Eagle River Republican Rep. Jamie Allard during the House floor debate on the bill. “Individuals should be able to take loans as they wish at whatever percentage rate. This will impact individuals who can’t otherwise get loans; they need to be able to access the funds in smaller amounts of loans, but this is prohibiting them from doing it … This will limit their access to that.”
Predatory payday loans are a big business for those with less-than-scrupulous intentions. A recent report by the Anchorage Daily News and ProPublica detailed how payday loan companies are using a tribe in Alaska to conceal their activities, a practice known as a “rent-a-tribe” scheme.
Still, Republicans weren’t always opposed to placing limits on predatory payday loans. A similar measure passed the House with near-unanimous support in 2024, when it was backed by then-Republican legislator Rep. Stanley Wright.
After the bill’s passage, its sponsor, Anchorage Democratic Sen. Forrest Dunbar, said the vote revealed an “interesting natural experiment in partisanship.”
“Every incumbent Republican in the House who voted against this bill this year, when it was carried by a Democrat, voted for it last year, when it was carried by a Republican,” he said. “In contrast, every incumbent House Democrat who voted for it this year also voted for it last year because it’s good policy.”
Legislators will have an opportunity to override the governor’s veto when they return to the legislative session. They’ll need 40 total votes from the House and Senate, but it passed with just 36 votes after most Republicans turned on the legislation.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Bluesky.
