WASHINGTON - A bipartisan majority of the House Ways and Means Committee has written to Rep. Dan Rostenkowski urging him not to forget about two tax-exempt bond provisions he cut from simplification legislation passed by the panel last week.
Beyond endorsing the two bond provisions, the letter is significant because it indicates there is broad support on the panel for tax-exempt financing, municipal lobbyists said.
"This tells me we have made a great deal of progress over the years through our grassroots efforts" to educate members of Congress about tax-exempt financing, said Catherine L. Spain, the chief lobbyist for the Government Finance Officers Association.
Tax lawmakers "now recognize the important role of tax-exempt bonds in the financing of infrastructure and other necessary facilities - things that are going to be important to the growth of the economy," said Spain, who is the director of the association's federal liaison center.
As originally introduced in January by Rostenkwoski, D-Ill., the simplification bill would have increased to $10 million the $5 million small-issuer exemption from the arbitrage rebate requirement. It would also have repealed the requirement that no more than 5% of the proceeds of an issue go toward uses that are "disproportionate and unrelated" to the purpose of the issue.
Before bringing the bill to the committee for a vote on Wednesday, Rostenkowski, who chairs the panel, eliminated the two provisions from the bill. He told the panel in a memo that the provisions were excised "because of revenue constraints." Municipal lobbyists say they understood that the two provisions together would have cost the federal government about $500 million.
"We want to make clear our continued support for raising the annual issuance limit for the arbitrage rebate exemption to $10 million and for repealing the unrelated and disproportionate use test," the 23 committee members said in their Nov. 3 letter.
"We do not want their deletion from this simplification bill to signify any loss of interest or support for their enactment at the earliest opportunity," the group said.
The letter was signed by 16 Democrats and seven Republicans on the 38-member panel. Eleven of the signers were just appointed to the committee this year.
The large number of signers of the letter is particularly important given the upheaval the committee has gone through in the past year, said Micah S. Green, the executive vice president of the Public Securities Association.
As a result of the 1992 elections, the panel lost 13 members, including former Rep. Beryl Anthony, D-Ark., who was considered the chief advocate in, Congress for tax-exempt financing. Since then, Green noted, the municipal community has been trying to determine who the strongest bond supporters on the committee are
"I think this is a group that is willing to hold up its hand and say, ~Count me as a supporter,'" Green said.
In January, 13 committee members, led by Rep. Bill Coyne, D-Pa., sent a letter to President Clinton urging him to offer proposals to ease curbs on tax-exempt bonds and to avoid proposals that would limit bond issuance and demand.
The two letter-writing campaigns, taken together, show that "Cardin and Coyne are emerging as real leaders," Spain said.
The legislation approved by the committee on Wednesday still includes three minor bond provisions. One would ease requirements for bona fide debt service funds under the 1989 arbitrage rebate relief law. Another would clarify that transactions. in which state or local governments Prepay equipment purchases are eligible for tax-exempt financing if certain conditions are met.
The third provision would expand the six-month exemption from the arbitrage rebate requirement to issuers that spend 95% of proceeds within that period and spend the other 5% in the following six months.
