Washington - A major leap forward is usually preceded by a step or two backward.

That certainly appeared likely to be the case last week with legislation to ease some of the curbs on tax-exempts. The prospects of a jump forward came when President Clinton said he plans to propose a major infrastructure bill early next year. Bond proponents believe the measure will include proposals to ease a broad range of curbs.

Although hopes for an infrastructure bill containing bond provisions faded during the last 16 months as the administration tackled other issues, Clinton said last week that he had not forgotten infrastructure and hoped to have a financing bill ready to send to Congress early next year.

In a statement that gave reason for cheer, Clinton hinted that the measure could include an easing in the bond curbs. "I now have our people studying ... what other options we have, short of some big tax increase which I don't think we can enact, to increase the funding flowing to infrastructure investment," the President said.

But Clinton's promise of an infrastructure bill next year may be a setback for the drive this year to convince Congress both to approve a trio of bond proposals to aid hospital financings and to broaden the trio to apply to all issuers.

With an infrastructure bill in the wind for next year, Congress is not likely to approve any broad bond measures this year. At best, it is only likely to approve the proposals covering hospital bonds. Even the hospital measures may be up in the air after it was revealed last week that the bond community is divided over whether the measures to aid hospital financings should be added to the health care reform bill.

A group of 501(c)(3) bond issuers and the Public Securities Association have been lobbying Congress to ease the limits on health care advance refundings, bank deductibility for small hospitals, and the amount of bonds a health care institution may have outstanding.

But several state and local government organizations said last week they are not pushing the measures because they favor legislation to ease a much broader range of bond curbs that would benefit all issuers.

Nine of the 24 Democrats on the House Ways and Means Committee support the hospital bond provisions. Prospects for their approval this year are dim, however, without the active support of state and local issuer groups which command more of the panel's attention than the health care or underwriting community.

If, by some chance, the provisions are adopted this year, they will provide a good foundation for the drive to get comprehensive bond-easing provisions attached to the infrastructure bill next year.

If the provisions aren't adopted this year, the debate will at least have helped set the stage for next year's drive.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.