WASHINGTON — The Senate on Monday agreed to limit debate on a $15 billion jobs bill that includes an expansion of the Build America Bond program and extensions of surface transportation funding. The motion for cloture was approved by a vote of 62 to 30 after 6:00 p.m.
Senate Majority Leader Harry Reid, D-Nev., said the Senate “will vote on [the bill] in a day or so.”
Under the measure, qualified school construction bonds, qualified zone academy bonds, qualified energy conservation bonds, and new clean renewable energy bonds could all be issued as direct-payment bonds. Currently these are tax-credit bonds that only provide investors with a tax credit.
Under provisions in the Senate version of the jobs bill that would “BABify” the bonds so issuers would receive direct payments from the federal government, large issuers would receive a subsidy rate of 45% of interest costs and small issuers would receive a 65% rate. The draft defines small issuers as those that sell less than $30 million of bonds in the calendar year.
The bill also would extend the current surface transportation law through the end of this calendar year and transfer $19.5 billion of general funds into the highway trust fund.
The vote came hours after the Securities Industry and Financial Markets Association threw its support behind a provision contained in the House version of the jobs bill that would also “BABify” QSCBs, which are used to finance school construction, but the payments would be made at a rate equal to the lesser of the actual interest rate of the bonds or the daily credit rate set by the Treasury Department for municipal tax-credit bonds. QSCBs are intended to subsidize 100% of interest costs, but many issuers have had to offer supplemental interest coupons to make the bonds marketable.
“As proposed by the House, direct-pay QSCBs at a reasonable rebate rate would avoid the inefficiencies associated with tax-credit bonds and would allow school districts to take full advantage of the assistance offered by the ARRA while potentially lowering the cost to both state and local municipalities, as well as the federal government,” Ken Bentsen Jr., SIFMA’s executive vice president, wrote in a three-page letter.
The letter was sent to Senate leaders as well as top House tax writers.
Bentsen contended the House’s version of “BABification” would not cost the federal government more than the existing tax-credit QSCB program.
The lower subsidy rate in the Senate’s proposal, on the other hand, “does not offer issuers of any size any more reason to utilize the program,” he said.
