WASHINGTON - The Senate kicked off its debate on the urban aid tax bill yesterday by agreeing to scale back a proposal for extending the authority to issue mortgage revenue and small-issue industrial development bonds, which expired June 30.
The Senate approved by voice vote an amendment that would set Sept. 30, 1993, as the new termination date for authority to issue mortgage bonds and small-issue IDBs. The tax package originally passed by the Senate Finance Committee would have extended those two bond programs and 10 other expiring provisions through Dec. 31, 1993.
The proposed change is part of an amendment offered by Sen. Bob Dole, R-Kan., to extend a tax credit for using nonconventional fuels. Sen. Dole said changing the date on the expiring provisions would raise the revenue needed to offset an expected revenue loss from continuing the fuel tax credit.
Debate originally began on the tax bill Aug. 11, but the Senate adjourned for a four-week recess Aug. 13 without completing action. In bringing the bill to the Senate floor again yesterday. Senate Finance Committee Chairman Lloyd Bentsen, D-Tex., said he hoped the Senate would complete action by late tomorrow.
But as debate on the urban aid package continued through the day, Sen. Bentsen and other top tax lawmakers warned that two big obstacles to final passage of the bill remain.
One is the huge number of amendments that senators want to add. There are "90-plus amendments swarming toward this bill." Sen. Bentsen said.
"There simply is no way we can finish this bill if we take the time to debate every amendment that the staffs or lobbyists can imagine." he added.
Sen. Bentsen said some senators already have pledged not to offer their amendments or have agreed to limit debate.
But, he added, more such pledges are needed. "Don't sacrifice the entire bill by trying to add one, more favored item," he told senators. "Don't overload the boat."
The other obstacle is President Bush's recent statement that he would "never, ever" support another tax increase, as he did in 1990 to help reduce the federal budget deficit. Lawmakers said that statement could be a signal that the President would veto the pending tax package, which contains tax increases. But President Bush has not yet said specifically whether he with reject the bill.
"There's an outside chance this [debate] may be a futile exercise." because the President could veto the measure just as Congress is adjourning before the elections, and there would be no opportunity to override or pass a scaled-down bill, said Sen. Bob Packwood, R-Ore. He is the ranking Republican on the finance panel.
"There are taxes in it, some of which the President previously asked for," Sen. Packwood said. "Here we are with this dilemma as we start this bill: What will he accept?"
As an example, Sen. Packwood cited a provision opposed by the municipal industry. The provision would require securities firms to report the market value, rather than the face value, of their municipal bonds and other securities, for tax purposes.
Sen. Packwood noted that President Bush had proposed the so-called mark-to-market accounting measure earlier this year in his fiscal 1993 budget proposal. The senator said the Bush administration has given no indication whether that proposal or any other tax increases in the urban aid package would now be acceptable to the President.
The centerpiece of the bill pending before the Senate is a proposal to create enterprise zones, economically depressed areas where tax breaks would be offered to start-up companies or firms willing to relocate. One of those incentives would be a new type of exempt-facility bond issued to make loans to businesses in the zones.
Urban aid legislation passed by the House in July contains a slightly different enterprise zone plan. Instead of creating a new type of bond, the bill proposes easing curbs on qualified redevelopment bonds so that they could be issued in enterprise zones. The legislation would make the tax exemptions for mortgage bonds and small-issue IDBs permanent. Once the Senate acts, a conference committee would have to reconcile the two versions.
During the next two days, the Senate could take up a number of different amendments that would affect the municipal bond market, according to a list of possible amendments that has been circulating around Capitol Hill.
The proposals include one by Sen. Pete Domenici, R-N.M., to spur issuance of environmental infrastructure bonds and another by Sen. John Glenn, D-Ohio, to loosen restrictions on small-issue industrial development bonds.