WASHINGTON — Transportation Secretary Ray LaHood is urging lawmakers to include in a final highway bill temporary relief from the alternative minimum tax for private-activity bonds and provisions that keep TIFIA loans from being subordinated to other debt in municipal bankruptcies.
LaHood made the requests in a 12-page letter to Senate Environment and Public Works Committee chairwoman Barbara Boxer that also makes clear the Obama administration will not support efforts, primarily by Republicans, to cut back on high-speed rail in California.
LaHood’s letter to Boxer, a California Democrat who is chairing a committee of House and Senate conferees, confirms the positions espoused in the president’s fiscal 2013 budget proposal.
The committee has been bombarded with lobbying letters since it first began meeting in early May, after the House passed legislation allowing negotiations with the Senate to begin.
The letter states that the administration “strongly supports” a provision in the Senate bill that offers AMT relief for private-activity bonds through the remainder of the year.
PABs were exempted from the AMT in 2009 and 2010, and regaining that exemption has been a high priority for transportation and public finance advocates ever since it expired.
“Bonds are an important financing component for infrastructure improvements,” the letter said.
“The AMT provision would help spur additional transportation infrastructure investments and generate new jobs and economic growth,” it said.
LaHood also urges maintenance of a robust Transportation Infrastructure Finance and Innovation Act program, which grants federal loans to leverage investment in transportation projects.
While both the House and Senate bills propose large boosts to the TIFIA program, the message to Boxer urges removal of a Senate bill provision that the U.S. Department of Transportation warned would allow a borrower to subordinate TIFIA debt to other debt in the event of bankruptcy.
Current law does not allow that, and the letter says the new language “would undermine the government’s ability to protect taxpayer investments.”
Despite an ominous warning from LaHood that California lawmakers need to approve bonds for funding a high-speed rail system by next month, the letter makes plain that the administration won’t support federal legislation designed to cut the project’s legs from under it.
During the deliberation in February of legislation that was sponsored by House Transportation Committee chairman Rep. John Mica, R-Fla., to reauthorize federal surface transportation spending, Rep. Jeff Denham, R-Calif., successfully attached an amendment to the legislation that would block federal funds from the California project.
While that legislation didn’t pass, Mica and House Oversight Committee chairman Darrell Issa, R-Calif., have also expressed doubts about the wisdom of further investment in the project.
Negotiations are still in the early stages, but Boxer said she hopes to have a bill ready for consideration by both chambers by early next month.
The current highway funding extension, the 10th since 2009, expires June 30.
