Groups Urge 'Prudent and Necessary’ BAB Extension

Six state and local groups are urging the Senate to pass an extension to the Build America Bonds program, which they say is critical to governments during this time of unprecedented budgetary strain.

In a one-page letter to Senate Finance Committee chairman Max Baucus, D-Mont., and ranking minority member Charles Grassley, R-Iowa, the groups said an extension to the program beyond its current expiration date at the end of the year is “both prudent and necessary.”

“We fear that failure to take prompt action on a BABs extension may have immediate, unintended, and negative consequences for the market for BABs, both in the United States and overseas,” the groups wrote in the letter, sent Friday.

The groups signing the letter were the Council of State Governments, the National Association of Counties, the National Association of State Treasurers, the National Association of State Auditors, Comptrollers, and Treasurers, the National League of Cities, and the United States Conference of Mayors.

The Senate considered extending the program for another two years — while gradually lowering the subsidy rate to 30% from 35% — as part of the American Jobs and Closing Tax Loopholes Act last month.

However, the act was ultimately shelved after Senate Republicans repeatedly blocked it, on the basis it would expand the federal deficit.

The package included several extensions to municipal bond provisions that were part of the stimulus act, including an increase to the small-issuer limit on bank-qualified bonds.

The signers urged senators to find another legislative vehicle for BABs, saying that the previous bill’s struggles were due to objections that had little or nothing to do with its extension.

“BABs have proven their worth as a stimulus for state and local government economic activity,” the groups said.

“We believe it would be most unfortunate if the program were not extended because of considerations that have nothing to do with” them, they said.

Baucus is supportive of the BABs program, but it is unclear whether the groups will find a receptive ear in Grassley, who has been an outspoken critic of the bonds.

Grassley has argued that the program primarily benefits Wall Street underwriters and just a handful of credit-poor states at the expense of American taxpayers. He voted against the BAB-extending legislation each time it was ­offered.

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