WASHINGTON - House and Senate tax conferees yesterday began hammering out a compromise agreement on the tax provisions of their separate urban aid tax packages and energy bills.
The conferees were not expected to make major headway on their work until later today or tomorrow. But uncertainty over whether President Bush would sign a tax bill left a major cloud over the negotiations.
The tax provisions in the energy bills were left out of a compromise agreement reached on the rest of that bill Wednesday night. They include House proposals to raise the limit on bank-qualified bonds and lift restrictions that limit nuclear decommissioning trust funds to investing in Treasuries and tax-exempt bonds.
Those provisions are expected to be negotiated by the tax conferees and possibly included in the final energy bill that is being drafted for approval by both houses next week.
The tax conferees yesterday designated House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., and Senate Finance Committee Chairman Lloyd Bentsen, D-Tex., to negotiate the final tax measure, with the understanding that they would seek counsel from the other panel members as needed.
Rep. Charles Rangel, D-N.Y., urged that an exception be made for the urban aid bills' proposals for creating enterprise zones, specially designated areas where tax breaks would be granted to help overcome economic blight.
He suggested that, rather than work on those provisions themselves, the two chairmen set up a special conferee task force that would do so. "You have to learn to trust us," he told Rep. Rostenkowski.
The New York congressman argued that special attention should be given to these proposals because the Senate and House versions are so far apart and would have widely differing effects on revenue. The House bill would allow the designation of 25 enterprise zones in urban areas and 25 in rural areas. The Senate bill would allow 75 such zones in urban regions and 40 in rural ones.
Rep. Rostenkowski, who took issue with Rep. Rangel on several points about the proposal, said he would consider the idea.
In general, similar municipal bond proposals appear in the House and Senate urban aid tax packages, but the details differ widely.
The Senate bill calls for creating a new category of exempt-facility bonds to make loans to small businesses in enterprise zones, while the House would ease existing restrictions on qualified redevelopment bonds so they could be used for loans in the zones.
The House bill would permanently extend the tax exemption for mortgage revenue bonds, small-issue industrial development bonds, and the low-income housing credit, but the Senate bill would only extend it for 15 months.
The tax exemption for these bonds and the credit expired on June 30.
The Senate tax bill also contains a provision that would increase the demand for municipal bonds by raising the limit on bank-eligible debt to $25 million from the present $10 million.
There is no comparable provision in the House tax bill, but the House Energy bill contains a provision to raise the bank-qualified limit to $20 million.