DALLAS -- The U. S. House of Representatives has cut federal funding for the Superconducting Super Collider project, but Texas officials yesterday said they were confident the money would be restored.
The officials also said that even if the funding is not forthcoming, bondholders would not suffer. In the market yesterday, traders expressed caution about the development, but the price of the bonds held steady.
On Wednesday, the House cut nearly all the $483 million in fiscal 1993 funding for the project when it approved a $21.8 billion energy and water appropriation bill by a vote of 232 to 181.
The measure now moves to the Senate, which in years past has reversed other attempts by the House to cut funding for the project.
Those cuts were nowhere near the size of those approved this week, but supporters of the project say they are not worried.
"We're very optimistic the Senate will put the funding back in," said Ed Bengler, executive director of the Texas National Research Laboratory Commission, the agency building the $8.5 billion underground particle accelerator. "This is not likely to be resolved until November or December."
State officials and lobbyists for the project said yesterday that the fight to restore full funding would likely be led by Sen. Lloyd Bentsen, D-Tex., chairman of the Senate Finance Committee.
"I think the SSC is the most important basic research project in the world today and I'm certainly not prepared to see the United States give up leadership on basic research," Sen. Bentsen said yesterday. "I think it's terribly important that this project be continued."
Sen. Bentsen said he has discussed the matter with Sen. J. Bennett Johnston, D-La., who chairs the energy and water development subcommittee of the Senate Appropriations Committee, and the that Sen. Johnston has reiterated his support for the project.
"We'll work very hard to see that those funds are restored on the Senate side," Sen. Bentsen said.
Proponents said the key to restoring the federal funds was in portraying the research facility as national in scope and not just the economic plum for Texas that many on Capitol Hill consider it.
"We'll be working real hard to make sure members realize the importance of this project to the entire country," said a lobbyist for the project. "It's not a just a Texas project."
As of April 30, the lobbyist said, 19,375 contracts in 45 states had been awarded in connection with the project. The total of the contracts is valued at $538 million.
Further, he said that universities in 36 states plant to conduct research at the facility.
Since its inception, appropriations for the project have been targeted by congressional critics who argue that the government has no idea what benefit the project will yield.
Rep. Sherwood Boehlert, R-N.Y., an opponent of funding, said the project "does represent good science, but it's not priority science. It's not science that this nation can afford at this critical juncture."
Mr. Bengler conceded yesterday that a failure to provide federal funding would block future bond issues. Texas has pledged to sell $1 billion of bonds for its share of the project. He said the holders of $500 million in debt already sold by the state for the project are safe from default.
Of the total, $250 million is voterapproved general obligation bonds backed by the double-A rated state, while the other $250 million is lease revenue bonds secured only by annual appropriations of the Texas legislature.
Those bonds are rates single-A by Fitch Investors Service and Moody's Investors Service and Aminus by Standard & Poor's Corp. Agency spokesmen said they were studying the House vote and would confer with Texas officials.
Tom Pollard, executive director of the Texas Bond Review Board, said the loss of federal money would not affect debt service, adding, "There's not a stream of payments from the federal government that secures the bonds."
State officials and rating analysts yesterday said that even though the lease revenue deal does not give bondholders a mortgage on the project, they are protected because of several security features included in last December's financing.
Analysts said the holders of the revenue bonds were protected by a negative pledge that would prevent the state from using any part of the project without continuing to appropriate debt service payments.
"The economic development potential of having a world-class research center is a strong incentive for the state," said Claire Cohen, executive vice president for ratings at Fitch.
George Leung, vice president and a management director for state ratings at Moody's, said that $190 million of proceeds from the December sale are still unspent and that Texas lawmakers have already appropriated payments through the end of fiscal 1993.
"We'll need to continue to see where it goes in Congress," he said.
But concerns over whether lawmakers would continue to make debt service payments if federal funding were scuttled left some in the market worried yesterday.
Market players expressed concern about the future value of the outstanding lease revenue bonds.
"Those bonds are suspicious right now," said the head of a major Wall Street trading desk. "We're going to have to wait and see what happens."
In the secondary market early yesterday, traders said a $2 million block and a $3 million block of the lease revenue bonds traded at slight premiums, indicating that the bonds are holding steady, at least for the moment.
But late in the trading day, several market sources said that the bond's bid side -- what a potential buyer perceives as the true value of the bond -- was down about 2 1/4 points from bids that were in the Street before the news was reported.
"The bid side is off in the market, but its' very hard right now to tell exactly what they're worth," said one market source. "Nobody is going to trade much of that stuff until we know what's going to happen."
Goldman, Sachs & Co. served as senior manager for the sale, marketed Dec. 10, 1991.
The $250 million lease revenue bonds for the project were priced to yield from 5.50% in 1995 to 6.85% in 2005. Sean Monsarrat contributed to this article.
