WASHINGTON - To ease curbs on municipal bonds, several senators are readying amendments that they may offer when the Senate debates the urban aid tax bill later this month, according to documents obtained by The Bond Buyer.
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, according to a Senate Finance Committee list that has not been made public but has quietly circulated among Capitol Hill observers.
Debate began on the tax bill Aug. 11, but the Senate adjourned for a four-week recess Aug. 13 without completing action. The Senate is scheduled to return Sept. 8, and Senate leaders say they want to resume the debate as soon as possible, although they have not set a date. Congress is expected to adjourn for the year in early October.
The committee list, labeled "Possible Tax Amendments" and dated Aug. 10, documents more than 100 amendments under consideration by 57 senators. The overwhelming number of amendments has been one factor stalling the measure, and Senate leaders have been struggling without success to craft an agreement that would limit the number of amendments and debate time used.
The amendment by Sen. Domenici, the ranking Republican on the Senate Budget Committee, involves a modified version of a bill he introduced last year to ease tax law curbs on environmental infrastructure bonds.
Under that bill, municipal bonds issued for treatment of sewage, hazardous waste and solid waste, and other environmental uses, would be considered governmental bonds regardless of the level of private participation in a project.
At least 95% of the proceeds would have to be dedicated to the project, and the facilities would have to serve the general public.
A committee aide said Sen. Domenici "is still very interested in offering that amendment." The aide added that the amendment would be a scaled-back version of the original bill, but did not specify how the measure would be modified.
The committee document also lists Sen. Glenn as considering an amendment that would "expand small-issue IDB rules slightly." Sen. Glenn's amendment is designed to allow more outside funds for projects financed with small-issue industrial development bonds, an aide to the senator said.
Under current law, individual industrial development bond issues are capped at $10 million. There is also an overall $10 million limit on the amount of money that may be spent on a project financed with industrial development bonds.
Sen. Glenn "is looking at the $10 million [expenditure] cap and the effect inflation has had on it" since it was enacted in 1978, the aide said. He declined to be more specific, other than to say Sen. Glenn is not planning to propose increasing the $10 million issue limit.
Also on the list is a possible amendment from Sen. James Sasser, D-Tenn., who may propose directing the Congressional Budget Office to study the issuance of pool bonds since 1986.
The Tax Reform Act of 1986 includes arbitrage rules and other restrictions designed to stop abuses in the area of pool bond issuance. An aide to Sen. Sasser said, however, that the senator wants the CBO to study pool bonds to see if the act went too far and if tax law changes are needed to make it easier to issue the bonds. The aide said he was not certain whether Sen. Sasser plans to offer the amendment.
Sen. Strom Thurmond, R-S.C., is listed as considering an amendment that would "provide tax-exempt status for bonds issued by cooperative research arrangements." Attempts to reach the senator or his aides to explain the amendment were unsuccessful.
Another amendment listed in the document, by Sen. Steven Symms, R-Idaho, would remove volume cap limitations on high-speed rail bonds. Sen. Symms was already successful in attaching the amendment to energy legislation that passed the Senate in late July.
An aide to the senator said Sen. Symms would make no move to propose his amendment during the tax bill debate.
One bond amendment on the list has already been publicly discussed by its sponsor. During debate on the tax bill in August, Sen. Bob Dole, R-Kan., said he would offer an amendment in September that would extend an expiring tax credit for the use of methanol and other nonconventional fuels.
Included in the amendment is a proposal to cut back the tax bill's proposed 18-month extensions of the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds to 15 months.
Sen. Dole said he added the cutback on the bond extenders to pay for the revenue loss that would result from his proposal on nonconventional fuels.