Understanding the Amendments: Amendment Two, Refinancing Debt

Politics features its very own circle of life.  Maybe circle of debt is more accurate.

It works like this.

Loans are taken out and sustained through interest payments.  But if interest rates go down, it makes sense for the old loans to get paid off.  They’re then replaced by new, fresh loans that are cheaper.

In the wilderness of Alabama politics, the state constitution says the government can maintain $750 million dollars of debt.  Amendment Two recycles that debt, making it cheaper.

WHNT News 19 Political Analyst Dr. Jess Brown says, “There’s still a $750 million dollar cap.  It just permits them to basically refinance some of the existing debt at a lower interest rate and have a lower debt service payment.”

Dr. Brown says you should think of it like buying a house, “If you had a mortgage at a certain rate and interest rates go down, you could actually buy a more expensive house and have the same mortgage payment each month.”

The cheaper debt would give the Alabama legislature more money for things like recruiting business and drawing jobs.

Dr. Brown adds, “Governor Bentley and the legislature will acquire about an additional $30 million dollars in borrowing capacity for industrial projects if the amendment passes.”

Here Dr. Brown says the legislature seems to be in agreement, “State leaders of both political parties feel like they do need an effective line of credit, a way to issue some general obligation bonds, so that they can recruit industrial prospects.”

So the circle of debt turns, with your vote squarely at the center of it.



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