High interest: the third amendment | Arkansas Blog

Wednesday, April 8, 2009

High interest: the third amendment

Posted By on Wed, Apr 8, 2009 at 8:37 AM

After much fussing, the Joint State Agencies Committee today with little discussion endorsed a third constitutional amendment for the 2010 election ballot. It's all about raising interest rates.

It's the three-headed monster mentioned yesterday, with slight changes.

1) It removes the cap on governmental bonds. The existing low interest rates have all but shut down the government bond business in Arkansas, not just bonds for student loans. The bond underwriters and lawyers must be served. (And, truth is, government does need to borrow for worthy projects and purposes.).

2) It changes the limit on consumer lending from a floating rate 5 percent above a federal financial index or 17 percent, whichever is LOWER to a simple 17 percent. Dropped was the idea to allow the rate to float to 5 percent above a federal financial index, not currently an issue, but it has been historically. Banks were already exempt. This allows car dealers and retail stores to ratchet up their credit substantially from existing rates.

3) It allows general obligation bonds issued for energy efficiency projects to be declared revenue bonds (in which "savings" will be pledged to retire the bonds). This is just some hocus pocus, though well-crafted energy programs from reputable conractors can be productive. The purpose is to allow government agencies to approve such bonds without a vote of the people. Enabling legislation will be required and the backers promise all kinds of safeguards will be built in against unscrupulous operators taking advantage of their tap into the treasury.

Putting these disparate measures in a single amendment would seem -- some believe -- to run counter to Supreme Court rulings on combining unrelated proposals in a single amendment. Adequately explaining the significance of all three in a ballot title and popular name will be daunting, I'd guess. But, as one propoent of higher interest limits said, "that's just an opinion." Indeed.

Anyway, it's headed to the ballot, John Williams reports, barring a successful court challenge in the meanwhile. It will be challenged.

This joins amendments providing for a right to hunt and fish and to make it easier for the state to take general tax revenues to give away in corporate welfare handouts to potential industrial prospects. Projects no longer need be "super projects" to qualify, should this amendment pass.

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