PABs Likely to Be Part of a Senate Committee's Transportation Bill

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Senator Ron Wyden, a Democrat from Oregon, listens to testimony during a Senate Finance Committee hearing in Washington, D.C., U.S., on Wednesday, July 27, 2011. The income tax rate cut sought by U.S. corporations will be difficult to achieve even if targeted tax breaks are eliminated, Committee Chairman Max Baucus said today. Photographer: Joshua Roberts/Bloomberg *** Local Caption *** Ron Wyden

PHILADELPHIA — A long-term transportation bill offered by the Senate Finance Committee would be likely to include some new type of private-activity bond, a Government Finance Officers Association official said here.

Dustin McDonald, director of the GFOA's federal liaison center, discussed legislative developments during a meeting of the group's governmental debt management committee on Saturday.

Congress recently extended the authorization for spending from the Highway Trust Fund for two months, through the end of July. The chairmen of the tax-writing committees are also interested in passing another extension through the end of the calendar year, with the hope that work on a long-term bill could be done at the start of 2016. In a "desperate Hail Mary," there could be an effort to move a long-term bill in the summer, but Congress will be on recess in August and will have to work on appropriations legislation after the recess ends, McDonald said.

Expanding PABs for infrastructure will come up a lot in congressional discussions about transportation reauthorization because the top Democrat on the finance committee, Ron Wyden of Oregon, is very interested in using bonds to increase investment in infrastructure and because the committee and the Obama administration have been discussing this concept, McDonald said.

Wyden has introduced a bill called the Move America Act of 2015 that would create a new type of PAB called Move America Bonds as well as a new type of tax credit for infrastructure. The bonds could be used to finance certain types of infrastructure projects which could be privately owned. They would be subject to new, separate state volume caps, which could be converted to tax-credit allocations, and would not be subject to the alternative minimum tax.

Wyden's bill will be a "pretty active part of his discussion with his [Republican] counterpart, Chairman [Orrin] Hatch, in organizing the financing plan for a transportation reauthorization bill," McDonald said.

President Obama's fiscal 2016 budget also proposes creating a new type of PAB for infrastructure. His proposal would create qualified public infrastructure bonds, which would not be subject to the AMT or state volume caps but could only be used to finance projects that are governmentally owned.

A long-term transportation bill will need to include revenue for the HTF, which reimburses states for surface transportation projects. Congress members' favorite idea for how to fund a long-term transportation bill is using revenue from the repatriation of foreign earnings, McDonald said. He noted that House Ways and Means Committee leaders haven't said much about transportation funding but want the funding to be paid for, possibly through repatriation.

McDonald said he thinks international tax reform to provide revenue for the HTF is the type of tax reform that Congress will focus on before the 2016 presidential election. He said he does not think comprehensive tax reform will happen until at least 2017, pointing out that "things in Washington move glacially slow."

While the finance committee has working groups that are coming up with recommendations for comprehensive tax reform, "those recommendations are probably going to go nowhere," McDonald said. It is unlikely that the committee will produce a tax-reform package that includes individual or corporate tax reform, he said.

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