HARRISBURG – After receiving unanimous approval in both the House and Senate, legislation sponsored by Rep. John Lawrence (R-West Grove), to enable the Commonwealth to pay off state debt more quickly and less expensively, is now headed to the governor’s desk.
House Bill 24
would change the way state bonds are issued to accelerate the retirement of Pennsylvania’s General Obligation debt, reduce the amount of interest paid over the life of state-issued bonds, and help the Commonwealth improve its bond rating.
Current practice “front loads” interest payments on state bond issuances with lower initial principal payments that grow as the bonds mature. This practice allows difficult budgeting decisions to be put off to the future.
“My legislation would require the principal for new issuances of state debt to be repaid in equal amounts over the term of the bond – usually 20 years,” said Lawrence. “This practice would pay down principal faster, reduce the amount of interest owed and improve the Commonwealth’s bond rating, which would reduce the cost of future borrowing.”
House Bill 24 would effectively restore the Commonwealth to the more responsible Equal Annual Maturities Plan method of debt issuance, which was common practice prior to 2001. This simple change for new debt issuances would reduce the obligations passed to future generations and end policies that have been negatively impacting Pennsylvania’s credit rating for years.
House Bill 24 now awaits the governor’s signature.
Representative John Lawrence
Pennsylvania House of Representatives
Media Contact: Donna Pinkham