WASHINGTON - President Clinton says that early next year he plans to unveil a major infrastructure financing bill, which municipal bond proponents predict will include proposals to ease curbs on tax-exempts.
In his 1992 campaign and early in his presidency, Clinton spoke often of the need to increase spending on infrastructure, and his aides indicated tax-exempt financing would be a way to accomplish the goal.
But hopes for an administration infrastructure bill faded as Clinton tackled other big issues, including the federal budget, health care reform, and crime prevention.
Monday night, Clinton said he hasn't forgotten infrastructure, and that his aides are working now on how to tackle the financing problem.
"I think we will have an infrastructure bill" ready to present to Congress" "early next year, in 1995," Clinton said at a televised town hall meeting in Craston, R.I. Clinton met Cranston citizens and took their questions in the WJAR television studios.
"I now have our people studying-... what other options we have, short of some big tax increase which I don't think we can enact, to increase the funding flowing to infrastructure investment, and especially to road and bridge improvements," Clinton said. He was responding to an audience member who asked what he intended to do to more fully fund infrastructure projects.
"It's good to hear infrastructure is still on their radar screen," Catherine L. Spain, the director of the Government Finance Officers Association's federal liaison center, said yesterday.
"We are encouraged that infrastructure and infrastructure finance continues to be a priority for the president and his administration," said Micah S. Green, the executive vice president of the Public Securities Association.
"We look forward to working with the administration in developing an infrastructure package that leverages limited government resources in a manner that maximizes infrastructure investment," Green said.
Aside from his remark about taxes, Clinton gave no hint of how his bill might propose to finance additional infrastructure projects. But lobbyists said that because the federal government is on a tight budget and because Clinton is a bond supporter, proposals to ease curbs on municipals are likely.
"I think we will see some tax-exempt [provisions] in there," said Amy K. Dunbar, the director of governmental affairs for the National Association of Bond Lawyers.
"We're far more likely to see bond [proposals] than anything else in that bill," said Frank Shafroth, the chief lobbyist for the National League of Cities.
"There's no capacity to create a new program that [would use] direct appropriations dollars for infrastructure unless Clinton is going to create a trust fund and have some dedicated source of revenue," said Shafroth, who is director of the league's office of policy and federal relations. "I suspect as the presidential campaign heats up, he will not be proposing new taxes."
Bond proponents have long advocated a number of proposals that would, by easing curbs on tax-exempt issuance, help finance infrastructure projects that tend to serve a public purpose but have a large amount of private involvement.
For example, proponents say a big financing impediment is the so-called 10% private use test, under which no more than 10% of a public-purpose bond issue may benefit private business.
Some in the bond community have advocated increasing the 10% maximum to 25%, the level prior to passage of the Tax Reform Act of 1986. Others have suggested the creation of an additional class of bonds, so-called public-activity bonds. They would, in certain cases, be treated as public-purpose bonds under the tax code, even though their private-use portion could be large enough to otherwise cause the bonds to fail the private-use test.
Aside from bond proposals in Clinton's own plan, municipal lobbyists said an infrastructure bill could also become a legislative vehicle for a number of other bond proposals they have long advocated, such as increases in the small-issuer exemptions from the arbitrage rebate requirement and from the limits on bank deductibility of bonds.