WASHINGTON -- Reports that Rep. Dan Rostenkowski might be indicted on criminal charges this month will probably damage the House Ways and Means Committee's ability to move forward with health care reform legislation, including provisions to ease curbs on tax-exempt bonds, lobbyists said Friday.

But aides to committee members also said the pressure of an imminent indictment could make the Illinois Democrat, who chairs the panel, re-double his efforts to complete work on a bill by the Memorial Day congressional recess, the informal deadline he had already set for his committee to take a final vote on a package.

Their comments came after The Washington Post reported Friday that U.S. Attorney Eric Holder, after months of investigation, has finally sent to the Justice Department an outline of proposed criminal charges against Rostenkowski.

Since 1992, Rostenkowski has been under investigation for his alleged role in the House Post Office scandal. Last year, the probe was reportedly widened to other matters, including whether Rostenkowski's payroll carried "ghost" employees who received salaries but did no work. Rostenkowski has steadfastedly denied any wrongdoing.

The Justice Department must now review Holder's recommendation. The Post story said an indictment could come by the end of May, although the department's review of the proposed charges could take longer.

The report comes just as the Ways and Means panel is poised to begin drafting a massive health-care reform bill. Rostenkowski, who has been meeting privately with panel members for the last few weeks, has said he wants to complete work by the Memorial Day recess, which begins May 27.

Municipal bond proponents have been pushing hard to have the bill include several provisions to ease bond curbs. One would lift the $150 million limit on the amount of bonds that a health care institution not classified as a hospital could have outstanding at any one time.

A second provision would permit health care institutions that have used up their authority for doing advance refundings of their bonds to do another one. An issuer would have to demonstrate that the refunding is needed to change bond covenants to facilitate a merger or change the services provided by the facility.

Bond proponents are also pushing for a relaxation of rules on bank eligibility of bonds as they apply to health care institutions. Under current law, banks may deduct the costs of purchasing and carrying tax-exempt bonds only if they are purchased from an issuer that expects to sell no more than $10 million of debt annually.

Bond proponents want a provision included in the bill that would apply the $10 million limit at the level of the borrower rather than the issuer. In that way, small health care facilities that pool their issues with others through a large state issuer would be issuing bank-eligible bonds.

In addition, reform legislation passed by the Ways and Means subcommittee on health contains a provision that would permit federally guaranteed tax-exempt bonds to be issued for health-care institutions serving urban areas with inadequate access to medical services.

The subcommittee bill is expected to form the base from which the full committee will work when it begins drafting, but it is unclear whether the federal guarantee provision will survive into the final bill.

In addition to the Ways and Means panel, at least two other House committees will weigh in with their own health care proposals and several others will insist on reviewing the legislation. The Senate also has a number of committees drafting health care bills, led by the Senate Finance Committee.

The potential damage to the progress of a health care bill arises from Rostenkowski's skill as a legislator, several lobbyists said.

An indictment, or even the possibility that one is near, "could be a damaging thing," said a health care lobbyist who requested anonymity. "Rostenkowski's ability to put together a package is going to drive it in Ways and Means. He's really key to getting something through."

The need for a strong leader like Rostenkowski is compounded by the fact that House Democrats apparently "don't have consensus on which way to go" on health care reform, said a tax lobbyist. "If that's true, this will just draw the process out even longer."

Reggie Todd, the chief lobbyist for the National Association of Counties, said he is concerned because "there is enough chaos in this process already. To add one more element, particularly a key element like Rostenkowski, just further magnifies the instability of the health reform effort."

If Rostenkowski is indicted, House rules require him to relinquish his chairmanship until he is cleared of the charges. Under the rules, the second senior Democrat on the panel, Rep. Sam Gibbons, D-Fla., would become the acting chairman.

A number of lobbyists said they were concerned about Gibbons' possible ascension to the chairmanship at such a critical time for the committee.

Gibbons "hasn't got any ability to pull together a coalition of votes in the committee for his position, or the President's, or anybody else's, so that becomes a huge problem," a state and local lobbyist said.

Bond proponents in particular have long been concerned that Gibbons could take over the committee reins. The congressman takes a dim view of tax-exempt private-activity bonds.

Gibbons waged a campaign in 1987 against bonds issued by Indian tribes, and in 1989 he tried to strip proposals for extending the tax exemptions for mortgage revenue bonds and small-issue industrial bonds out of a Ways and Means bill.

In contrast to the concerns expressed by lobbyists, several congressional aides said it was important not to count Rostenkowski out, as long as he remains in the chairman's seat.

"When he has set a deadline for getting something done, in the past we have met that deadline," said an aide to a Republican on the panel. "So I don't see how [the possibility of an indictment] is going to affect things one way or another."

The chance that an indictment is looming, in fact, may make Rostenkowski work even harder to push a bill through quickly, said an aide to a committee Democrat. "If I were the chairman, I would be wanting to show my skills now. This is a perfect opportunity for him to do what he does best."

One factor working in Rostenkowski's favor is the need for the Justice Department to review the charges reportedly put together by Holder. With so much at stake for the Clinton Administration, which is strongly pushing health care reform, the Justice officials may be willing to drag their feet just long enough to get a bill through the committee, a municipal lobbyist said.

If Senate majority leader George Mitchell, D-Maine, "gave up a Supreme Court seat to see this thing through, do you not think there will be some delays before an indictment is actually pursued?" the lobbyist said.

Micah S. Green, the executive vice president of the Public Securities Association, said it was his impression that Rostenkowski seems determined to forge ahead with a health care bill, despite the imminent indictment. "The chairman continues to amaze me with his ability to lead and maintain his intensity on the issues in spite of that pressure."

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