An attorney seeking to overturn a state constitutional amendment that removed the interest rate cap on Arkansas state and municipal bonds said the measure should never have been put on the November 2010 ballot.
Attorney Eugene Sayre argued before the Arkansas Supreme Court last week that Issue 2 consisted of several separate measures combined into a single question.
Sayre said that was done to skirt the limit of two constitutional amendments that can be referred to voters by the Legislature.
The proposal was approved by 64% of voters last year as Amendment 89 to the state constitution. It went into effect on Jan. 1.
“We maintain that those three are disparate and don’t have a common theme, purpose or subject,” Sayre said during oral arguments.
The interest-cap amendment replaced a constitutional provision that limited the interest rate on government bonds to no more than 200 basis points above the 90-day commercial paper discount rate posted by the Federal Reserve Bank of St. Louis.
It also allowed local governments to issue revenue bonds for energy-saving projects that would be supported by the cost savings realized through more efficient equipment.
The amendment also set a cap of 17% for retail interest charges.
In the response from the state, assistant attorney general Scott Richardson said the amendment met constitutional requirements because its various provisions were consistent with Arkansas financial regulation.
The case was filed with the Supreme Court and a Pulaski County court in September 2010, but the high court said the lower court should hear the case first because the bond amendment was put on the ballot by lawmakers rather than through a petition initiative.
Circuit Judge Mary McGowan issued her ruling on the morning of the 2010 election that kept the constitutional amendment measure on the ballot.
Issue 2 repealed Article 19, Section 13 of the Arkansas constitution as well as amendments 30, 38, 62, 65, and 78.