WASHINGTON — The House Ways and Means Committee is expected today to vote on a bill that would authorize the issuance of up to $5.4 billion of tax credit bonds for renewable energy, reduction of greenhouse gases, and schools in certain areas, as well as extend or expand programs for green bonds, qualified mortgage revenue bonds for veterans, and Gulf Opportunity Zone bonds.
HR 6049, the Energy and Tax Extenders Act of 2008, which was introduced late yesterday by committee chairman Charles Rangel, D-N.Y., would create a new category of “qualified energy conservation bonds” to finance state and local initiatives to reduce greenhouse gas emissions. Up to $3 billion of the bonds would be allocated to states, localities, and tribal governments. The proposal would cost the federal government an estimated $1.027 billion over 10 years.
The bill would also authorize $2 billion of clean renewable energy bonds to finance facilities that would generate electricity from renewable resources such as wind, hydropower, and trash combustion facilities. The so-called CREBs would be allocated in thirds for projects of governments, electric cooperatives, and public power providers. The estimated cost is $548 million over 10 years.
In addition, the bill would authorize state and local governments to issue $400 million of qualified zone academy bonds, which can be used for public schools below college level that are located in “empowerment zones” or “enterprise communities.” The measure would also improve the marketability of QZABs by modifying current arbitrage restrictions. The estimated cost is $202 million over ten years.
All three of these proposals involve tax-credit bonds, which provide holders with an income tax credit in lieu of tax-exempt interest payments. These proposals come as Treasury Department officials have complained about the growing use of such bonds under a variety of programs that each require a separate set of tax rules.
In other provisions, the bill would extend authority to issue qualified “green building” and “sustainable design project” bonds through the end of 2012. The authority for these bonds is currently set to expire on Sept. 30, 2009. The estimated cost is $45 million over 10 years.
Special rules that allow veterans to qualify for state-operated tax-exempt mortgage revenue bond programs that provide lower-income individuals with access to mortgages at lower cost would be extended for one year through 2008 with an exemption from the first-time homebuyer requirement. The estimated cost is $158 million over ten years.
Projects in two additional counties in Alabama would qualify for tax-exempt bond financing under the Gulf Opportunity or GO Zone program, under the bill, which would also allow taxpayers in GO Zone areas to amend prior returns to take into account the receipt of hurricane related recovery grants and waive the construction deadline for certain property eligible for bonus depreciation. That provision would cost $1.333 billion over 10 years.
In another disaster-related bond program, the bill would implement President Bush’s proposal to provide New York City and state with tax credits for expenditures made for transportation infrastructure projects connected with the New York Liberty Zone, which was established after the Sept. 11, 2001, terrorist attacks. The estimated cost is $1.117 billion over 10 years.
Meanwhile, House members yesterday approved, by a vote of 318 to 106, the conference report on the farm bill, which contains $500 million of tax-exempt forest conservation bonds and improvements to the “aggie bond” program. The vote ensures that Congress will have enough votes to override any presidential veto. The Senate previously approved its farm bill by a similar margin.
Bush has threatened to veto the $280 billion, five-year package, saying it was too expensive. The two chambers are expected to approve the final bill before the end of the week.
The improvements to the aggie bond program — which provides bonds for first-time farmers and ranchers to help purchase land — would mark the first changes to the program in 26 years. The bill would increase the loan limit for new farmers, index it to inflation, and expand the program’s application to more farmers.