Sen. Richard Burr, R-N.C., has introduced a bill that would prohibit state and local governments from issuing tax-exempt bonds unless they meet certain pension-disclosure requirements. Meanwhile, two House members have introduced separate bills to reinstate the Build America Bond program.
Burr's bill — S. 347, The Public Employee Pension Transparency Act — was introduced Feb. 15 and is virtually the same tax legislation as was introduced by Rep. Devin Nunes, R-Calif., in the House on Feb. 9.
It would bar issuers from selling tax-exempt bonds or tax-credit bonds and from receiving federal subsidy payments for Build America Bonds or similar direct-pay debt if they fail to comply with reporting requirements related to their public employee pension funds.
State and local governments would have to file reports annually with the Treasury secretary that include details about their pension plans, including expected contributions, unfunded liabilities, assumptions, returns for the plan year and five previous years, and plans for eliminating unfunded liabilities. They could value their unfunded liabilities any way they choose but would have to include in their report or a separate report valuations based on the U.S. Treasury bond yield curve rate.
The Treasury secretary would be directed to develop model reporting statements and to create and maintain a public website for the reports with searchable capabilities.
Burr's co-sponsors include fellow Republican Senators John Thune of South Dakota, Tom Coburn of Oklahoma, Johnny Isakson of Georgia, John Ensign of Nevada, Charles Grassley of Iowa and Jon Kyl of Arizona.
Two California Democrats, Representatives Laura Richardson and Adam Schiff, introduced separate bills Feb. 16 to extend the BAB program, which expired Dec 31.
The popular program had provided issuers with a federal subsidy rate of 35% of interest costs. At least 2,352 of BAB issues totaling $181.49 billion were sold in 2009 and 2010, according to Thomson Reuters.
Richardson's bill — HR 736, the Babe Ruth Act of 2011 — would reinstate the BAB program for four years, with reduced federal subsidy rates of 32% in 2011 and 30% in each of 2012, 2013, and 2014.
A spokesman said it was called the Babe Ruth Act because it would be a home run for the economy. The bill would allow BABs to be used to current-refund previously issued BABs. It also would clarify that BABs can be used to finance capital expenditures for levees and other flood- control projects.
Schiff's bill is HR 747, the Build America Bond Extension Act of 2011. It would reinstate the stimulus program for two years through the end of 2012 at a federal subsidy rate of 28%, the rate the Obama administration said would be "revenue neutral" for the permanent BAB program it proposed in its fiscal 2011 and 2012 budget requests. It would allow BABs to be issued to finance construction projects on property owned by 501(c)(3) nonprofit organizations, including hospitals and universities.
"California has issued numerous Build America Bonds to undertake critical public-infrastructure projects, so much so that nearly a quarter of the [BABs] issued nationwide have been issued in our state," Schiff said in a release. "Extending the popular program for another two years and expanding the number of eligible organizations that can use these bonds to fund projects will provide a much-needed boost to the hard-hit construction industry in California and throughout the nation."
Already pending is a bill sponsored by Rep. Gerald Connolly, D-Va., that would reinstate the BAB program for two years at federal subsidy payment rates of 32% this year and 31% in 2012.
