WASHINGTON -- Rep. Dan Rostenkowski, D-Ill., the chairman of the House Ways and Means Committee, late yesterday introduced a comprehensive urban aid bill that includes provisions that would permanently extend the use of mortgage revenue bonds and small-issue industrial revenue bonds.
The bill, which will be the "starting point" for a committee markup scheduled for this morning, also contains tax simplification provisions previously supported by the committee that would ease some existing curbs on tax-exempt bonds, according to Jim Jaffe, a spokesman for the committee.
But in a move to raise revenues to support the $14.5 billion, five-year package, the bill contains a provision that bond analysts have said could hurt demand for municipal bonds. The provision would require mark-to-market accounting of securities, Mr. Jaffe said.
The proposed permanent extensions for mortgage and industrial development bonds, which are due to expire June 30, are among four permanent extensions included in the bill, he said. Another tax provision the bill would make permanent is the low-income housing tax credit, he said.
But several popular expiring provisions, including the research and development tax credit backed by President Bush, would be only temporarily extended. Mr. Jaffe said he expects Republicans and some Democrats on the panel to attempt to modify the part of the bill dealing with expiring provisions, perhaps to avoid any mixed treatment of the provisions.
Despite Mr. Rostenkowski's plan to permanently extend the popular bond provisions, observers have said the extensions may be made temporary by the panel if the permanent extensions prove to be too costly.
The Ways and Means Chairman's bill also would create about 50 new urban and rural enterprise zones where corporations establishing business would receive highly favorable tax treatment. None of the new enterprise zone provisions, however, would involve a wider use of tax-exempt bonds, Mr. Jaffee said.
The mark-to-market proposal, which the Senate Finance Committee included in a measure it approved earlier this month to extend emergency unemployment benefits, could cause firms to dump large amount of tax-exempt bonds just before the end of the tax year to avoid tax losses.
Rep. Rostenkowski introduced his legislation just a week after the Senate Finance Committee approved a measure that would continue the housing credit and the bond exemptions for 18 months, through Dec. 31, 1993.
However, the Senate has not scheduled action on its legislation and mortgage bond and IDB proponents have said they are concerned there will not be enough time for Congress to take final action on the extensions before they expire on June 30.
To avoid a lengthy lapse in the bond exemptions, Congress would have to act by July 3, the day it adjourns for its Independence Day recess. The House returns the following week, but the Senate will remain out of session until the Democratic National Convention ends on July 17. Capitol Hill observers have predicted that if the legislation is not approved by July 3, Congress may not act on the extensions until the fall.