§ 17244 Warrant Interest Rate Limits

• •The law lets the government set a maximum interest rate of 12% per year for special loans called 'reimbursement warrants'.
• •The actual interest rate can be lower than 12% and is decided either by the best bids if sold publicly or by the Controller if sold privately.
• •The interest rate can be fixed (stays the same) or variable (changes over time).
• •Different loans can have different interest rates, even if they are the same type of loan.

Imagine the government needs to borrow money to fix roads and issues a loan called a 'reimbursement warrant'.

The government says the highest interest they will pay is 12% per year. If banks offer to lend the money at 10% interest, the government will pay 10% because it’s the best deal. If the loan is sold privately, the Controller might agree to a 9% interest rate. The interest rate could stay the same or change over time, but it won’t go above 12%.