WASHINGTON Acting House Ways and Means Committee chairman Sam Gibbons said yesterday he is not a fan of tax-exempt bonds, but he has no plans to propose new restrictions on them.
In his first public comments on municipal bonds since taking over the Ways and Means Committee in June, the Florida Democrat also said he does not expect to write a major tax bill next year and thus sees little opportunity in 1995 for bond proponents who may seek proposals for easing tax-exempt bond curbs.
Gibbons, who was speaking to a small group of reporters on Capitol Hill, was blunt in his assessment of municipal bonds, particularly privateactivity bonds.
"Anybody that has traced my tax history knows that I have never been a wild supporter of tax-free obligations. I would rather restrict them to public types of expenditures: hospitals, roads, bridges, and things of "that sort," said Gibbons, who has been a member of Congress for more than three decades. "I don't go for private use of tax-exempt obligations."
At the same time, Gibbons said he is not planning.any legislative assault against the municipal market. "We calmed down some of the abuses" in the Tax Reform Act-of 1986, he said, "and I don't have any plans now to go back and rehash that."
Gibbons would not even consider any new curbs "without some very thorough study by the committee and the staff as to what the problems are and that really needs correcting, and where any abuses are," he said. He did not say any such study was in the works.
The number two man on the Ways and Means panel for more than 10 years, Gibbons was thrust into the spotlight in June when Rep. Dan Rostenkowski, D-Ill., was forced to temporarily relinquish his chairmanship after being indicted in connection with the House Post Office scandal. House rules permit Rostenkowski to regain his post if he is cleared of all charges.
Gibbons' ascension worried municipal market participants because he has long been known to take a dim view of private-activity bonds. His most visible foray into the municipal arena came in 1987, when news reports described Several questionable bond transactions undertaken by Indian tribes.
Largely at Gibbons' urging, Congress passed legislation that year requiring proceeds from privateactivity bonds issued by-Indian tribes to be used only for facilities that are on the reservations and are owned and operated by the tribes.
Looking ahead to next year and beyond, Gibbons said yesterday that he prefers to let the whole tax code alone for awhile, and he has no plans for proposing a major tax bill.
"I don't anticipate for at least the next two years any grandiose scheme to go out and rewrite and reform the Internal Revenue Code or [within it] the tax-exempt obligations law," Gibbons said.
"I don't plan to make a career out of stirring up the Internal Revenue Code," Gibbons said. "I think if Congress can be faulted for anything, I think we have excessively stirred up that code over the years, and I would plan not to stir it up any more."
Gibbons said he does want the committee to consider legislation that would foster investment in infrastructure development, but only if it can avoid raising taxes to pay for such a proposal.
"We will try to do infrastructure legislation without any new taxes," Gibbons said. "I don't know if it can be done."
Infrastructure is likely to be on Congress' plate in 1995 because President Clinton has promised to send an infrastructure finance bill to Capitol Hill early next year. Gibbons said the White House has not told him what it plans to include in that package.
The one piece of tax legislation Gibbons said he does want to pass next year is the simplification bill, which contains several small provisions to ease curbs on tax-exempts.
Gibbons noted that the bill, which passed the House in May, has languished in the Senate because the Senate Finance Committee has failed to draft its own version of the measure. "We' re going to work with the Senate quietly, and I hope persuasively, to move [the bill] within the next session of Congress," he said.
One of the House bill's bond provisions 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.
A third provision would expand the six-month exemption from the arbitrage rebate requirement to an issuer that spends 95% of proceeds within that period and spends the other 5% in the following six months. Currently, an issuer must spend all but $100,000 in the first six months.
Gibbons said he expects Congress to take another stab at health care reform legislation next year, but he would like to get away from the effort at passing one huge package, and instead pass several small bills that address various aspects of the health care debate.
For the municipal market, this year's health care legislation was significant because the Senate Finance Committee's version included a provision to eliminate the $150 million cap on the amount of bonds that 501(c)(3) institutions other than hospitals may have outstanding at one time. Gibbons did not say whether he thought the bond provision would be resurrected next year.