WASHINGTON -- Pressure from Rep. Dan Rostenkowski may have been the single most important reason that Congress permanently extended the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds, municipal lobbyists said yesterday.
The Chicago Democrat had come to believe that mortgage bonds and small-issue IDBs could help cities, including his own, and he listened when members of the House Ways and Means Committee said they were tired of the seemingly never-ending cycle of temporary extensions, those sources said.
The permanent extensions took effect Tuesday when President Bill Clinton signed into law the deficit-reduction package that contains them. Authority to issue mortgage bonds and IDBs had expired June 30, 1992.
Lobbyists said that Rostenkowski, who chairs the Ways and Means Committee, did not suddenly decide this year to support mortgage bonds and small-issue IDBs. He first proposed making them permanent as part of last year's tax bill. Although the Senate pushed for temporary extensions, Rostenkowski's proposal survived into the final version hammered out by negotiators for both houses, only to be vetoed by then-President George Bush.
This year, Rostenkowski wanted to hold on to that precedent. Once again, the House approved permanent extensions while the Senate voted only to continue the exemptions through June 30, 1994.
This year, "I didn't think the chairman would settle for less from the Senate than he settled for last time," said John T. McEvoy, the executive director of the National Council of State Housing Agencies.
Another motivating factor for Rostenkowski is that he "wanted to put to rest the problem of extenders coming up every year," said a lobbyist for a local government. Rostenkowski understood that "members had gotten tired of doing this every year."
Rostenkowski was also influenced by a steady drumbeat from the constituents back home. "Chicago and Illinois individuals and organizations have continued to point out the value" of the mortgage bond and IDB programs, said a municipal lobbyist.
Several lobbyists also described what they said was a crucial moment in the process on July 13, about a week before tax conferees began their negotiations. On that day, Rostenkowski and Chicago Mayor Richard M. Daley were scheduled to testify at a congressional hearing, but the start of the hearing was delayed.
While they were waiting for the hearing to begin, Daley reportedly took the opportunity to show Rostenkowski a list of the tax bill items Chicago considered its top priorities. Near the top of the list were the tax exemptions for small-issue IDBs and mortgage revenue bonds.
"Richie, I'll try to get these things for you," Rostenkowski was said to have told Daley.
A spokesman for Rostenkowski confirmed that Chicago officials had repeatedly told the Ways and Means chairman that mortgage bonds and IDBs were important to them.
But the spokesman also said Rostenkowski's motivation went beyond trying to help his own city.
"There was also a feeling, which President Clinton has expressed and others as well, that this was not solely a deficit reduction package. There were also a limited number of positive things that could be done in terms of helping the cities and encouraging the economy," the spokesman said.
Given the budget constraints, Rostenkowski saw permanent extensions of the mortgage bond and IDB exemptions "as a constructive step within that broader context," the spokesman said.
Rostenkowski himself expressed that view during the Aug. 3 edition of the "MacNeil/Lehrer Newshour." "Low-income housing [tax credit], small-issue IDBs, mortgage revenue bonds, these are all things in the small business community that people will [use to] invest in and create jobs outside of government," he said.
While Rostenkowski appeared to give the critical push to obtain the permanent bond extensions, proponents of mortgage bonds and IDBs said several other factors made the permanent extensions possible this year.
For one, this year's tax bill was the largest in several years. "It was a big enough bill" that there would be relatively little difficulty in paying for small revenue-losing items, said a securities industry lobbyist.
The permanent mortgage bond extension is estimated to cost the federal government $966 million over five years and the IDB extension $252 million. Those are small amounts of money in a bill designed to raise billions of dollars in revenue over that period.
Another factor was the strong support of the Clinton administration. "This was the first time we ever had a President who asked for permanent extensions," McEvoy said. "We weren't swimming upstream against an administration" as proponents had been the case during the Reagan-Bush years, he said.
For the mortgage bond exemption, still another factor was intense last-minute lobbying by some congressional supporters of the two tax exemptions. Sen. Joseph I. Lieberman, D-Conn., and Rep. Nancy Pelosi, D-Calif., sent letters to the tax conferees urging them to make the mortgage bond exemption permanent. The letters were signed by overwhelming majorities of both houses, and may have been a factor in the conferees' final decision, lobbyists said.
