BOISE - Prejudgment interest rates allowed in state code could be dropped to 7.5 percent from the current 12 percent if a bill currently under consideration at the Legislature gets amended and becomes law.

That measure, sponsored by Sen. John Goedde, R-Coeur d'Alene, cleared the Senate Commerce and Human Resources Committee Thursday.

The bill was unanimously sent to the Idaho Senate's amending order with the idea that the 7.5 percent may be added to Senate Bill 1282, and that an addition to current law would be deleted.

That deletion would cover language requiring that the prejudgment interest "shall be calculated identically as the post-judgment interest calculation contained in this subsection."

Goedde said the 12 percent interest rate was set into Idaho law in 1981.

During committee testimony, Goedde said the 33-year-old prejudgment interest rate fails to fit the current times.

Inflation was 10.3 percent when the current law was passed back in the '80s, Goedde said.

"I think we have done a great disservice to the citizens of this state in neglecting to look at what we have before us, until now" Goedde said. "Twelve percent in today's environment - I'll be nice - not fair."

Goedde indicated the 12 percent currently legal should be put in context.

"Again, if you were looking at interest rates allowable in statute at 30-year fixed mortgages, that 7.5 percent would be more like 3.5 percent," Goedde said. "So, I don't think that we're gouging anyone with 7.5 percent."

Insurance industry lobbyist Woody Richards called the 7.5 percent interest rate "a compromise rate."

"Certainly, one could still argue that it should be something different," Richards said. "We would, though, encourage you to adopt the amendments that have been proposed."