WASHINGTON -- The House will end its 1993 session this week without taking action on a tax simplification bill containing several small provisions that would ease curbs on municipal bonds, congressional aides said yesterday.
The simplification measure simply got lost in the crush of last-minute bills that the House has been trying to pass before adjourning today or tomorrow the aides said.
Even if the House approved the bill, it would still have been far from final enactment because the Senate has yet to draft its version of tax simplification. Senate Finance Committee Chairman Daniel P. Moynihan, D-N.Y., has not said when or if he plans to draft a simplification bill.
As originally introduced in January by House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., the simplification bill contained two major provisions to ease tax-exempt bond curbs. One would have increased to $10 million the $5 million small-issuer exemption to the arbitrage rebate requirement. The other would have repealed the requirement that no more than 5% of the proceeds of an issue go toward uses that are "disproportionate and unrelated" to the purpose of the issue.
But before bringing the bill to a vote in his committee on Nov. 4, Rostenkowski eliminated the two provisions because they would have lost a significant amount of revenue for the federal government. Municipal lobbyists have said they understand that together the two are estimated to cost about $500 million.
The action prompted a bipartisan majority of Ways and Means members, led by Rep. Benjamin L. Cardin, D-Md., to send Rostenkowski a letter urging him to find another vehicle next year to pass the two provisions.
With the elimination of the two bond items, three other minor provisions remain. One would ease requirements for bona fide debt service funds under the 1989 arbitrage rebate relief law. Another would clarify that transactions in which state or local governments prepay equipment purchases are eligible for tax-exempt financing if certain conditions are met.
The third provision would expand the six-month exception from the arbitrage rebate requirement to an issuer that spends 95% of proceeds within that period and spends the other 5% in the following six months.
Earlier this year, municipal lobbyists hoped the simplification measure would become a much larger bill and encompass a broad range of bond provisions. But in the Nov. 4 committee meeting, Rostenkowski strongly urged members not to load the bill down with their favorite items.
Municipal lobbyists have been pushing for a group of bond provisions that were passed as part of a comprehensive tax bill passed by Congress last year but vetoed by then-President Bush. In addition to the items Rostenkowski included in this year's simplification bill, they include provisions to ease limits on bank deductibility and to remove the $150 million limit on the amount of bonds that a nonhospital 501(c)(3) organization may have outstanding.
