WASHINGTON —The Senate is expected Tuesday to vote on a tax compromise measure without amendments, including one by Sen. Ron Wyden, D-Ore., that would have extended the Build America Bond program through 2011 with a 32% subsidy payment.
Technically, lawmakers in the Senate have 30 hours of debate on the bill beginning Monday night, after the end of the vote on the cloture motion that limits debate on the bill, but they could agree to a shorter debate time.
At press time, more than 80 Senate members had voted to limit debate on the compromise tax bill — far more than the 60 needed — to pave the way for its passage and the voting was still continuing.
Market participants were unhappy amendments were not allowed on the bill, but understood the rationale.
“If they allow a vote on the BAB amendment, I think it would pass,” one muni market lobbyist said. But that would open up the bill to other amendments.
Sens. Olympia J. Snowe, R-Maine, and Sherrod Brown, D-Ohio, filed an amendment to address China’s unlawful practice of currency manipulation that would direct the U.S. Department of Commerce to treat currency undervaluation as a prohibited export subsidy.
Wyden would simply withdraw the amendment if the legislation cannot be amended, the aides said.
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, which was introduced Thursday night by Senate Majority Leader Harry Reid, D-Nev., also would not extend other muni bond-related tax incentives such as the alternative minimum tax exemption for private-activity bonds, recovery zone bonds, or the authority for federal home loan banks to issue letters of credit for tax-exempt debt.
The bill would extend the Bush administration tax cuts for two years, unemployment benefits for 13 months, and exempt taxes on estates of $5 million for individuals. It contains few bond provisions.
It would extend qualified zone academy bonds through 2011 and authorize $400 million more for them, but only as tax-credit bonds without any direct-pay option similar to BABs.
The bill would not prevent muni issuers from continuing to sell qualified school construction bonds, qualified energy conservation bonds, and clean renewable energy bonds already allocated with the direct-pay option, even after 2010. QSCB issuers get payments from the federal government equal to the lesser of the bonds’ actual interest rate or the tax credit rate. QECB and CREB issuers get payments equal to 70% of their interest cost.
The bill also contains a two-year extension, through 2012, for an arbitrage-rebate exception for school construction bonds and would allow issuers to sell private-activity bonds outside of state volume caps for certain qualified education facilities.
The authority to issue New York Liberty Zone bonds and Gulf Opportunity Zone bonds would be extended through 2011, along with certain tax incentives associated with them. The ability to deduct state and local sales taxes in lieu of state and local income taxes also would be extended through 2011.
