The Oregon House last week unanimously approved a bill that would allow state Treasurer Ben Westlund to use Build America Bonds.

HB 3646 would authorize the state to deposit the federal government's 35% interest rate subsidy for BABs into state debt service funds and clear the way for the sale of almost $1 billion in BABs for the Oregon Department of Transportation this year.

BABs were created by the American Recovery and Reinvestment Act of 2009. Under the program, the federal government gives state and local governments a direct interest subsidy instead of the implicit subsidy included in traditional tax-exempt municipal bonds.

"We should seize every opportunity to cut the cost of borrowing," Westlund said. "The more money we save, the more will be available to invest in other valuable projects and create jobs."

The bill, sponsored by Rep. Lew Frederick, D-Portland, moved on to the Senate, where it was approved by Finance and Revenue Committee yesterday. Westlund's office estimates that using BABs this year could save the state $100 million in debt service over the next two decades.

The bill also expands the types of nonprofit projects that can use tax-exempt financing through the Oregon Facilities Authority.

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