WASHINGTON -- Rep. William J. Coyne said this week he plans to introduce comprehensive legislation shortly that would ease a variety of tax law curbs on municipal bonds, including the arbitrage rebate requirement, limits on bank deductibility, and the private-activity volume cap.
Although the Pennsylvania Democrat will be introducing the bill too late for Congress to act on it this session, municipal lobbyists said the measure will be significant for two reasons.
First, the bill can become a rallying point next year around which bond, proponents can focus efforts to persuade Congress to make changes in tax law bond provisions.
Second, it gives the bond community another strong advocate of public finance on the House Ways and Means Committee.
Since Beryl Anthony lost his congressional seat last year, bond proponents have been searching for a panel member who would pick up where Anthony left off. Rep. Ben Cardin, D-Md., was the first to take action this year, urging Congress and the Clinton Administration to support bond simplification proposals.
In a speech Monday to the Council of Development Finance Agencies in Pittsburgh, Coyne said his bond bill will touch on five major areas. The legislation will "seek to simplify both the definition of private-activity bonds and the arbitrage rebate requirement," Coyne said in a prepared text.
A third proposal will involve "a new tax-exempt instrument for promoting economic development and creating jobs," he said in the speech. "Other issues to be addressed by this legislation include bank interest deductibility and the private-activity bond volume cap."
Coyne said he is pursuing the changes because he believes "Congress is ready to consider ways to help state and local governments make more effective use of tax-exempt financing."
In deciding to introduce a bill, Coyne "is following up on his word that he would be a leader," said Catherine L. Spain, the director of the Government Finance Officers Association's federal liaison center.
Spain said her association is looking forward to the bill because "we'll have something to work on and rally around."
Offering the legislation will be the beginning of what may have to be a long campaign to get substantial changes enacted, lobbyists said.
"The fact that Coyne is putting some of these ideas out, even if they don't get enacted in the short term, is probably a good sign for bonds," said William Daly, a lobbyist for New York City. "You have to get the discussion going. It's a very rare proposal that is proposed and enacted in one short session of Congress."
Although this is the first time Coyne has moved to initiate a comprehensive bond bill, he is not new to the bond area, lobbyists noted. For several years, Coyne has been the chief sponsor of legislation to make the tax exemption for industrial development bonds permanent. In August, Congress granted a permanent extension for the IDB exemption and for the tax exemption for mortgage revenue bonds.
Coyne "has certainly staked himself out as one of the leaders on bonds," said Micah S. Green, the executive vice president of the Public Securities Association. The planned bill "is absolutely consistent with Coyne's history on the issue of bonds."
Coyne acknowledged that his support for IDBs motivated him to take a broader role on issues involving public finance. "It was my work to extend IDBs, that strengthened most [significantly] my commitment to helping state and local governments make effective use of tax-exempt financing," he said in his speech.
"I know from my days on the City Council of Pittsburgh that [municipal] bonds can be a vital source of funding for building new schools, highways, ports, hospitals, airports, water and sewer lines, and bridges," he said. As a tax lawmaker, Coyne said he has "learned that much work is needed to ensure that tax-exempt financing reaches its full potential."
Despite their enthusiasm for the forthcoming bill, some lobbyists said they were not sure how many strong supporters Coyne will find on the Ways and Means Committee. Several members have voiced support for public finance, but have failed to deliver crucial votes, the lobbyists said.
For example, there were almost no complaints in a Ways and Means panel meeting two weeks ago when chairman Dan Rostenkowski, D-Ill., eliminated two key bond provisions from a pending simplification bill for budgetary reasons.
Cardin was the only lawmaker who stood up to Rostenkowski, urging him to make sure the items were approved at some point. Other panel members signed a letter on the subject to the chairman, but remained silent at the meeting.
"It's clear that some people are supportive, but it's not clear there is enough [support] there," one lobbyist said. "Even when you have the votes, people are reluctant to take on the chairman."
