As Congress attempts to work around a mercurial White House and stay on schedule with key reauthorizations, bond issuers are bracing for impact and hoping for positive movement on a landmark bipartisan housing bill that President Trump refused to sign last week.
"We do expect the bill to be signed into law," said Paige Mellerio, senior policy advisor, for the Government Finance Officers Association's federal liaison center.
"We don't know exactly when. I think there is jockeying and politics involved, but at the end of the day, we do think that the president will clear this bill and we will have this housing package enacted into law."
The comments came during the GFOA's meeting of the Debt Committee on Saturday in Chicago.
The 21st Century ROAD to Housing Act represents the first major housing bill to clear Congress in 30 years and promises to boost bond sales while expanding affordable housing development.
The GFOA is continuing to work with champions on Capitol Hill to put advance refunding back on the radar screen of the House Ways and Means Committee along with raising the small issuer threshold, also known as bank qualified debt.
The exemption allows smaller communities to access tax-exempt rates more easily through bank placements and reduces financing costs. Both efforts are part of Rep. Terri Sewell's, D-Ala., existing LIFT Act that's currently on the back burner.
The LIFT Act also explores a return to a class of direct pay taxable bonds that rely on the federal government kicking back a subsidy to issuers to help defray the tax burden.
"We have had conversations with her office about how we feel about them after our experience with Build America Bonds and sequestration cuts," said Mellerio.
BABs turned into a headache when budget sequestration began reducing the promised amounts of the subsidies.
"We're looking to get a small issuer bill introduced over in the Senate side," said Mellerio. "We've had some very early conversations with Senator Crapo's staff, the Senate Finance Committee chair. He, in the past, has sponsored legislation to raise the small issuer threshold, and his staff seem interested in potentially exploring that again next Congress."
The current Congress is also moving forward with the surface transportation reauthorization that would replace the Infrastructure and Jobs Act expiring Sept. 30.
The bill has already passed the House Transportation and Infrastructure Committee who is now looking at new ways to finance roads and bridges.
"There was an amendment that was offered and then repealed, so it was essentially just a messaging amendment that would authorize the Department of Transportation to create a pilot program to provide technical assistance to issuers that are looking to issue bonds on the blockchain," said Mellerio.
"It's an evolving conversation, and we'll see what happens. That's a priority that Congress is looking to get done by the end of this Congress."
Getting the final version of the STR done on time is looking less likely. "We don't expect them to get anything across the finish line this year," said Mellerio. "Ultimately, we think they'll have to pass a one-year reauthorization, since time is very limited, and the Senate has yet to act.
Reauthorizing the Water Resource Development Act is also starting to look not so fluid. "We haven't seen any legislation related to that," said Mellerio. "A lot of the big water groups are really focusing on State Revolving Fund reauthorization this go around because the revolving loan fund expires on September."
