WASHINGTON — Researchers for the Center on Law and Public Finance are refuting the notion that partisanship has dominated the issuance of Build America Bonds.
The center published a report Monday based on analysis of $137 billion of BAB-funded projects from the time the stimulus bonds were first issued in April 2009 through Oct. 4, 2010.
“The [center] has found that the Build America Bonds are a squarely bipartisan program,” the researchers wrote.
The report came as Congress was considering tax legislation that some market participants continued to hope would include an extension of the BAB program, even with a lower interest subsidy. Republicans including key Senate Finance Committee ranking Republican Chuck Grassley, R-Iowa, have challenged the program and claimed that it lines the pockets of Wall Street bankers at the expense of taxpayers.
“I don’t think it’s an accurate reflection of the underlying issues going on,” said Michael Likosky, an infrastructure finance expert and researcher for the report. “I think there is bipartisan support for the program, and not just in the banking sector.”
The popular direct-pay tax-credit bonds were created by the American Recovery and Reinvestment Act and appear likely to expire Dec. 31.
As an incentive to revive the municipal bond market, Congress authorized a federal direct-pay option for the tax-credit bonds that allowed issuers to receive a subsidy for up to 35% of interest costs on the bonds.
They were designed to help state and local governmental entities finance a broad array of projects, from roads and bridges to schools and energy facilities.
The report highlighted some states, such as Utah, that are predominantly Republican but issued a large amount of the federally subsidized bonds to pay for infrastructure and public-use projects.
“Build America Bonds have been used across the country to carry out projects like the seismic retrofit of the San Francisco-Oakland Bay Bridge, the extension of the Dallas Area Rapid Transit system, and the creation of affordable, convenient options for higher education in New Jersey,” the report said. “Utah issued the largest amount of [BABs] per [gross domestic product] of any state in the union, and Montana was the only state to have no issuances.”
The report found that seven out of 10 BAB-financed projects were located physically in more than one jurisdiction, “uniting the districts of both Republicans and Democrats.”
Of the remaining 30% of projects, the researchers found a moderately larger dollar amount of BABs issued in Democratic jurisdictions — about 22% — compared to Republican ones — about 8%.
It also said that congressional districts held by Republicans and Democrats benefited equally as often from BAB issuance.
When the state governor’s party was the main factor, the researchers found a mostly even split between so-called red and blue states.
BABs were issued slightly more often in states with a Republican governor. Those states accounted for 53% of volume, while states with Democratic governors accounted for about 46% of all BABs issued.
In addition, the report found that $443 of BABs were issued for each person in the U.S., based on $137.8 billion of BABs issued over 1,774 deals.
The center is sponsored by the Ford Foundation and the Rockefeller Foundation, and is part of the Social Science Research Council.