WASHINGTON - Sen. Lloyd Bentsen yesterday agreed to beef up his enterprise zone proposal in an attempt to resuscitate the urban aid tax bill and get it approved by the Senate this week.
Earlier in the week, the package appeared to be stalled because the Senate was busy with other bills. Also, the Bush administration and Republican senators were complaining that the bill would create enterprise zones in too few cities.
But yesterday Senate leaders began debate on the bill, with Sen. Bentsen, D-tex., announcing he would expand his plan so it would create 125 zones, up from 25. Municipal lobbyists said the move by the Senate Finance Committee chairman was designed to garner enough votes for the package so that the Senate can approve it before adjourning today for a month-long recess.
The proposed change "certainly sets the stage for the kind of bipartisan agreement there ought to be on enterprise zones," Sen. Joseph Lieberman, D-Conn., said during floor debate. Sen. Lieberman had been a critic of Sen. Bentsen's original proposal and had been pushing a competing proposal that would have created about 300 enterprise zones.
But even though debate began on the package yesterday, it was still unclear whether it would move forward. An aide to Sen. Bentsen said senators have indicated their intention to offer a total of 150 amendments to the package, too many to be accommodated in the short time the Senate has before adjourning.
The enterprise zone proposal contains a number of tax incentives that would be available to businesses in distressed areas. One incentive would be a new type of exempt-facility bond issued to make loans to small businesses.
The bonds would be bank-eligible, regardless of the size of the issuer, and 50% of each issue would be exempt from the private-activity bond volume cap. The per business limit on the amount of bonds issued would be $1 million.
Sen. Bentsen's new proposal for 125 enterprise zones would cost the federal government $5.5 billion, compared with a $2.5 billion price tag for his original plan. Sen. Bentsen proposed to offset that additional revenue loss by dropping two other provisions out of the package: a tax credit for first-time home buyers and an investment tax credit.
Sen. Bentsen acknowledged in a statement that the two provisions being dropped were supported by the Bush administration, and his action could invite a presidential veto. But he noted that the administration had already threatened to reject his enterprise zone plan.
"Both [provisions] were included in the original bill at the administration's request, before the administration changed its position and indicated it would veto the tax measure," he said.
The package would also renew the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds through Dec. 31, 1993. Those two tax breaks and others expired June 30.
Proponents of the expiring provisions said they are concerned that a group of senators led by Sen. Bob Dole, R-Kan., plans to offer an amendment to the package that would cut back the length of the extensions, changing the proposed expiration date to Sept. 30, 1993.
The change in the extensions would pay for a proposal to continue an expiring tax credit for taxpayers who use unconventional fuels such as gasohol, the lobbyists said.
Another bond provision in the package would increase the supply of bank-qualified bonds. Under current law, banks are allowed to deduct carrying costs for bonds purchased from an issuer who expects to sell no more than $10 million of governmental bonds annually. The provision would increase that limit to $25 million.
Another provision would eliminate the $150 million limit on outstanding 501(c)(3) bonds that applies to individual private, nonprofit organizations other than hospitals. The provision would also reclassify 501(c)(3) bonds as governmental bonds.