WASHINGTON — Airport executives made one more attempt this week to convince Senate tax lawmakers to extend two popular bond-financing provisions beyond the end of this year so that airports can continue to borrow at lower rates.
The American Association of Airport Executives sent a letter Monday afternoon to Senate Finance Committee chairman Max Baucus, D-Mont., asking him to push for an extension of the Build America Bonds program and a temporary exemption of private-activity bonds from the alternative minimum tax.
In its letter, the AAAE asked Baucus to push for BAB and AMT-holiday extensions during the lame-duck session, before newly elected lawmakers take office early next year. The BAB extension could be included in tax legislation that Congress could consider by the end of the year.
The AMT holiday has allowed airports to issue debt that otherwise would have been unattractive to some investors because of the tax. The BAB program has allowed airports — along with other municipal bond issuers — to issue taxable bonds and receive direct payments from the federal government equal to 35% of interest costs.
But both airport-friendly provisions, which were created by the American Recovery and Reinvestment Act in February 2009, are set to expire at the end of this year. This election shifted control of the House to Republicans and slimmed the Democratic majority in the Senate, casting some doubt on whether BAB proponents will obtain an extension of the program.
Sen. Chuck Grassley of Iowa, the ranking minority member of the Senate Finance Committee, and other Republicans have called BABs a spending program disguised as a tax cut and have charged BABs mostly benefit Wall Street bankers. Treasury Department officials and issuers dispute such charges.
About 40 airports have issued AMT-exempt bonds totaling $10 billion since the AMT holiday began, according to the AAAE. As a result, the AMT provision has been at the top of the group’s list of priorities.
But BABs have been helpful to sector borrowing as well. Airports in Chicago, Denver, Las Vegas, Long Beach, and Los Angeles have issued BABs totaling about $2 billion, the group said in its letter.
Like other groups in the transportation sector, the AAAE stressed how many jobs were created by the AMT and BAB provisions. “Extending AMT relief and the Build America Bonds program will help airports continue to build critical infrastructure projects … and stimulate the economy by creating good-paying jobs,” the letter said.
