Interest rates will be lowered in certain judgment cases.
Effective April 16, 2010, a new law undoes an inadvertent 2009 increase in the interest rate when money is owed to state or local governments or vice versa for things like tax appeals and eminent domain judgments. Gov. Tim Pawlenty signed it April 15.
Last year’s omnibus public safety finance law increased the interest rate on any award or judgment greater than $50,000 from the simple interest per annum based on the secondary market yield of a one-year U.S. Treasury bill (roughly 4 percent) to 10 percent.
Rep. Paul Marquart (DFL-Dilworth), who sponsors the law with Sen. Rod Skoe (DFL-Clearbrook), said the law was intended to just apply to large insurance companies. He said in some cases insurance companies that had to pay a claim were instead holding onto the money and putting it into an account with an interest rate greater than 4 percent. Therefore, the companies were making money before paying the claim.
The new law provides that judgments greater than $50,000 for or against the state or a political subdivision, including cities, counties and school districts, revert back to simple interest plus annum law. The interest continues to be computed as simple interest per annum for all judgments of $50,000 or less.
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