WASHINGTON — House Ways and Means Committee chairman Sander Levin Wednesday introduced a new bill that enables Congress to make another attempt at extending several bond provisions slated to expire at the end of the year, including Build America Bonds.
The Investing In American Jobs and Closing Tax Loopholes Act — HR 5893 — would extend BABs for two years, along with other extensions to temporary bond provisions first enacted in the American Recovery and Reinvestment Act of 2009.
The bill “is about moving forward to create opportunities for Americans in America using job-creating programs such as the Build America Bonds,” Levin, a Michigan Democrat, said in a statement. “Experts have deemed these bonds, which helped support nearly two million jobs, to be one of the most successful recovery efforts in place. Republican and Democratic governors alike have praised these programs.”
House Democrats plan to bring the bill straight to the House floor and hope to pass it before Congress breaks for a month-long recess beginning Aug. 9, according to sources. The Senate would then take up the measure after the break.
The House previously passed a bill extending temporary bond provisions, but it ground to a halt in the Senate after Democrats were unable to garner 60 votes on the package to block a filibuster threatened by Republicans. The bond provisions were eventually stripped from that bill, but have found a new home in Levin’s measure.
The legislation would gradually reduce the subsidy rate for BABs from the current 35% level to 32% for bonds sold in 2011, and 30% for those sold in 2012.
“National League of Cities is certainly pleased that the chairman has recognized … that these important provisions need to be extended,” said Lars Etzkorn, program director of the NLC’s center for federal relations.
The NLC was one of six groups that sent a letter earlier this month to senators urging them to pass a BAB extension, saying the program has provided critical assistance to state and local governments during times of extraordinary budgetary pressures. Issuers have sold nearly $120 billion of the securities since passage of the ARRA last year, according to data from Thomson Reuters.
Levin’s bill also includes an extension to another muni provision that encouraged banks to buy more tax-exempt debt from smaller issuers. It would extend by one year, through 2011, the greater small-issuer exemption for bank-qualified bonds.
The ARRA modified the tax law to allow banks to deduct 80% of the costs of buying and carrying tax-exempt debt sold by borrowers whose annual issuance is no greater than $30 million, up from $10 million. It also allowed for the $30 million limit to be applied to individual borrowers participating in conduit deals, rather than at the conduit-issuer level.
“We appreciate and welcome chairman Levin’s leadership in continuing to emphasize the relationship between municipal finance liberalization, stimulus and jobs,” said Charles Samuels, a lawyer with Mintz Levin Cohn Ferris Glovsky & Popeo PC and counsel to the National Association of Health and Educational Facilities Finance Authorities. “Nonprofit education and health continue to need access on reasonable terms to the capital market.”
Susan Gaffney, director of the Government Finance Officers Association’s federal liaison center, also threw her support behind the bank-qualified debt provision, saying it is “vital for smaller local governments to be able to issue debt efficiently and in a cost-effective manner.”
The bill also would extend for one year the programs for recovery zone economic development bonds and recovery zone facility bonds. It would also allocate an additional $10 billion and $15 billion to the programs, respectively. And the bond authority would be allocated using a new formula that would guarantee each locality receives a minimum allocation equal to at least its share of national unemployment as of December 2009.
The bill also would extend for one year, through 2011, the exemption from the alternative minimum tax for all private-activity bonds, including those issued to refund debt sold after 2003. It also would exempt water and sewer exempt-facility bonds from state volume caps for PABs, and allow Federal Home Loan Banks to guarantee tax-exempt bonds through 2011.