WASHINGTON -- The House Ways and Means Committee may vote to permanently extend the tax exemptions for mortgage revenue bonds and small-issue manufacturing industrial development bonds this week, municipal lobbyists said Friday.
The panel is scheduled to draft legislation Wednesday that would create urban enterprise zones and extend some expiring tax provisions, according to a committee spokesman, who declined to say which tax breaks the panel would favor or how long the extensions would be.
But the lobbyists said in the most likely scenario the committee will resurrect a measure it approved earlier this year that would have permanently extended the two bond exemptions, the low-income housing tax credit, and other tax breaks set to expire June 30.
The committee could make the extensions temporary, however, if lawmakers determine the permanent extensions would be too costly, the lobbyists said.
Last week, the Senate Finance Committee approved legislation that would continue the housing credit and the bond exemptions for 18 months, through Dec. 31, 1993.
Mortgage bond and IDB proponents said they are concerned there will not be enough time for Congress to take final action on the extensions before June 30.
To avoid a lengthy lapse in the bond exemptions, Congress would have to act by July 3, the day it adjourns for its Independence Day recess, those sources said. The House returns the following week, but the Senate will remain out of session until the Democratic National Convention ends July 17. Capitol Hill observers have predicted that if the legislation is not approved by July 3, Congress may not act on the extensions until the fall.
In addition to its decisions on extensions, the committee also will be deciding how to structure its proposal for enterprise zones. Support has been growing in Congress for creating the zones in the wake of recent riots in Los Angeles and other cities. The zones are envisioned as economically depressed areas in which tax incentives would be available to start-up companies or business willing to relocate to those areas.
Tax aides and lobbyists have said that tax-exempt commercial IDBs could become one of the tax incentives offered in the zones, though they said they were not certain whether the committee would favor the bonds, which were abolished by the Tax Reform Act of 1986.
Bush administration officials have said President Bush wants to create a new category of exempt-facility bonds that would finance loans of up to $250,000 per business in qualified enterprise zones. The loans could finance only tangible property, and the bonds would be subject to the $50 per capita private-activity bond volume cap.
Over the years, Congress had considered, but never passed, various proposals for enterprise zones. None of the plans has had a bond component, except for a 1988 proposal by Rep. Dan Rostenkowski, D-III. He had suggested allowing the tax exemption for small-issue manufacturing IDBs to die on schedule that year, but be retained in enterprise zones.
