WASHINGTON -- The municipal bond community lost its chief advocate in Congress yesterday after Rep. Beryl Anthony failed in his bid to win re-election to Arkansas's Fourth Congressional District seat.

Rep Anthony a member of the House Ways and Means Committee, narrowly lost a Democratic primary runoff on Tuesday to Arkansas Secretary of State Bill McCuen. Mr. McCuen has received 44,653 votes, or 51%, to Mr. Anthony's 43,004, or 49%.

"I think you can call this the worst thing to happen to municipal finance since the Tax Reform Act of 1986," said Amy K. Dunbar, the director of governmental affairs for the National Association of Bond Lawyers.

Rep. Anthony had been forced into the runoff because he had failed to win 50% of the vote in a three-way primary contest on May 26. Lobbyists attributed his loss to a spreading anti-incumbency mood among voters, and possibly his connection to the House bank scandal. In March, Rep. Anthony acknowledged 77 overdrafts totaling $57,500. House bank records showed his overdrafts totaled 109.

Rep. Anthony, who will complete his seventh term when Congress adjourns this fall, first gained widespread attention in municipal circles in 1988, when he formed the Anthony Public Finance Commission.

The 21-member group, which includes governors, mayors, bondlawyers and others involved in public finance, studied the effects of the 1986 tax act on the bond market and published a report in 1989. Since then, the commission has continued to research problems in the market.

Several municipal lobbyists said they had no idea what the future of the commission would be. J.W. Rayder, an aide to Rep. Anthony and the commission's staff director, was unavailable for comment.

"I'm personally upset, because he burst on the scene, he formed the Anthony Commission, and he became an advocate and a knowledgeable insider and perhaps most important, a friend of the industry whom he worked personally," said Jeffrey S. Green, a member of the commission.

"He really was the right person in the right place at the right time for all of us in state and local government," said Mr. Green, who is also the general counsel of the Port Authority of New York and New Jersey.

Earlier this year, when it became apparent that Rep. Anthony was in political trouble, bond proponents worked on raising funds for the campaign. In a statement to Public Securities Association members, the group's executive vice president, Micah S. Green, said Rep. Anthony appreciated "all of the efforts over the last several weeks to provide assistance to his campaign effort."

Ms. Dunbar said a group of public finance lawyers also organized to try to help the campaign, but added that the bond lawyers association was not involved in that effort.

Rep. Anthony has introduced a number of bills to ease 1986 act curbs, particularly the arbitrage rebate requirement. One of those bills was enacted in 1989 and became known as the arbitrge rebate relief law, because it allowed certain issuers to avoid the requirement if they spent their bond proceeds according to a schedule set up under the act.

Last November Rep. Anthony brought together three other members of Congress to form a caucus designed to educate other lawmakers about issues concerning infrastructure and public finance. Lobbyists said they expected the other three legislators would carry on the caucus after Rep. Anthony leaves Capitol Hill.

Rep. Anthony's most recent legislative initiative in the bond area came last month, when the Ways and Means panel debated a comprehensive energy bill. During that session, the committee added an amendment that would remove investment restrictions on nuclear decommissioning funds. Rep. Anthony warned that removing those curbs could hurt demand for municipal bonds, and he persuaded the panel to add an amendment that would increase the supply of bank-qualified bonds.

Frank Shafroth, the chief lobbyist for the National League of Cities, said Rep. Anthony "was a rare commodity, because he understood municipal bonds to be a most basic financing tool for cities," and he was also "the first person in Congress ever to devote so much time" to public finance issues.

"Beryl Anthony has shown the entire Ways and Means Committee that tax-exempt financing is not an abusive tax break," the PSA's Mr. Green said. "He has done more to transform the thinking about bonds on the committee than truly anyone, and he'll be sorely missed."

Because of Rep. Anthony's impending departure, the municipal bond community "has a lot of homework to do in terms of getting to the new members and making the case to them," said Catherine L. Spain, the director of the Government Finance Officers Association's federal liaison center.

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