WASHINGTON -- House and Senate tax negotiators are expected to agree to extend the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds through June 30, 1995, Rep. Barbara Kennelly said yesterday.
The Connecticut Democrat, though not a conferee on the tax and budget package, is a member of the House Ways and Means Committee and the chief sponsor of legislation to make the mortgage bond exemption permanent. That exemption and the IDB exemption expired June 30, 1992.
Kennelly, who is a member of the House leadership, said in a brief interview she saw no hope that conferees would agree to the permanent extension of either the mortgage bond or IDB exemption that was included in the House tax measure.
But "we're getting better than we hoped," she said.
Asked if that meant the conferees would extend the two bond programs through June 30, 1995, the same date they have agreed to extend an education tax credit, Kennelly replied it did.
The Senate's version of the tax bill would extend the two bond programs only through June 30, 1994.
Kennelly's remarks came as Ways and Means Chairman Dan Rostenkowski, D-111., and Senate Finance Committee Chairman Daniel P. Moynihan, D-N.Y., were meeting privately to continue reconciling differences between their two bills.
When he emerged from the meeting, Moynihan told reporters about a number of issues the two lawmakers had resolved, though none pertained to tax-exempt bonds. Moynihan said he expected the conferees to make a final decision on the bond extensions today.
Rostenkowski said the conferees also have not decided "whether we do enterprise zones or what the numbers are on enterprise zones" in the final package.
The House tax bill's enterprise zone proposal would create a new category of exempt-facility bond that could be used to finance businesses in the zones. The Senate bill does not include a provision on enterprise zones.
Overall, the biggest unresolved issue is what kind of energy tax to include in the final bill. "You can bet that's going to be resolved last, " said Rostenkowski, who this week proposed dropping the House's plan for a tax on heat content in favor of a 9 cent increase in the federal transportation fuels tax.
But the 9 cent figure is still far higher than the Senate bill's proposal for a 4.3 cent fuels tax increase.
That issue still appeared to be a long way from being resolved yesterday. Sen. Max Baucus, D-Mont., a tax conferee, told reporters that many senators are still upset about the idea of any increase in the fuels tax. "There is more resistance than the leadership realizes," he said.
Thus far, the only bond-related issue the conferees have resolved is the so-called mark-to-market accounting proposal. Under current law, securities firms are allowed to choose whether to report, for tax purposes, the market value or the face value of their securities. The proposal, in both the House and Senate bill, would require securities firms to report the market value of those securities, beginning with the 1993 tax year. Firms would make the change gradually over a five-year period.
The conferees worked out some small technical differences between their versions and declared the matter resolved, with mark-to-market included in the final package.
Several of the conferees said yesterday that they still expect to complete work on the tax package by the end of the week.
Another bond-related issue that is not resolved involves high-speed rail bonds. Under current law, issuers of bonds to finance high-speed rail project must obtain an allocation under the private-activity volume cap for 25% of each issue. The House bill would eliminate that requirement, while the Senate measure does not include that provision.
In trading offers back and forth, House conferees have continued to insist on retaining the provision in the final bill, while Senate conferees have insisted on keeping it out.
