WASHINGTON -- It's getting to be like a scene from the film Groundhog Day.
In that surprisingly insightful comedy, a Pittsburgh television reporter finds himself trapped in a nightmare in which he wakes up each morning sentenced to cover the emergence of nearby Punxsutawney's winter-prognosticating rodent over and over again.
For municipals, the recurring nightmare has become the seven-year old drive to ease the curbs on some kinds of tax-exempt bonds, to expand the use of others, and to extend the use of mortgage revenue bonds and small-issue industrial development bonds.
As the figurative alarm clock goes off this week signaling the start of negotiations between House and Senate conferees to hammer out a final budget and tax package, the tax-exempt market finds itself back in the same nightmare.
Despite general support in both the House and Senate for expanding the use of some bonds and permanently extending the use of mortgage bonds and IDBs, the municipal market will be lucky to win another short extension for mortgage bonds and IDBs, and perhaps one slight expansion in the use of bonds.
The current nightmare comes in part because the revenues needed to pay for the bond proposals and others evaporated when President Clinton was forced to shift the emphasis of his budget package from new investment in the economy to deficit reduction.
The House also approved Clinton's plan for an energy tax that would raise $70 billion and proposed using the proceeds in part to permanently extend the use of mortgage bonds and IDBs. eliminate volume cap restrictions on bonds used to build high-speed rail projects, and create a new category of exempt-facility bonds to be used spur development in 110 enterprise zones.
But the Senate substituted a gas tax that will raise only $21 billion, and Senate tax writers were forced to eliminate the high-speed rail and enterprise zone bond proposals and extend mortgage bonds and IDBs only through June 30, 1994.
Any compromise on an energy tax is likely to be closer to the Senate's version, so it appears there will be only a small amount of money to spend on bond provisions. And high-speed rail seems to have disappeared from the administration's radar screens.
That probably means that the best the market can expect is another temporary extension in the use of mortgage bonds and, perhaps, approval of the enterprise zone plan. It may survive because it is being used to win votes for the overall package from House members who represent depressed areas.
This year, unfortunately, the municipal market appears unlikely to escape its recurring nightmare. Whether it ever escapes depends on whether Clinton can put together a salable plan to reinvigorate the nation's economy and infrastructure that includes an expansion of the uses of tax-exempt bonds.