Speaker of the House of Representatives Mike Turzai (R-Allegheny) recently applauded a new debt reduction law, noting that it will enable Pennsylvania to pay off debt more efficiently and less expensively, saving taxpayer dollars.
Turzai praised Rep. John Lawrence (R-Chester County), who authored of Act 43 of 2019, previously House Bill 24.
“Rep. Lawrence worked hard to make this bill become law,” Turzai said. “Thanks to him, the amount of interest paid on debt will decrease, thereby keeping Pennsylvania on a path to improving its overall bond rating. It’s a win-win for the state and our hardworking citizens.”
Act 43 requires the principal for new state debt to be repaid in equal amounts over the term of the bond. Currently, the state uses a repayment schedule that includes lower principal payments in the first few years and much higher principal payments as the loan matures.
“Since 2001, the Commonwealth has used a methodology whereby payments become more expensive as time goes on,” Turzai said. “This new method front loads interest payments and backloads principal payments, as with a 30-year home mortgage.