Muni advocate Richard Neal faces challenge in Democratic primary

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Rep. Richard Neal, D-Mass., spoke at a campaign event in Springfield, Mass. on Sunday in advance of a Tuesday Democratic primary challenge by Holyoke Mayor Alex Morse.

The most influential advocate for tax-advantaged bonds in Congress is fighting for his political future in a Tuesday Democratic primary in Massachusetts.

House Ways and Means Committee Chairman Richard Neal, a former mayor of Springfield, faces a challenge from progressive Democrats who are backing Holyoke Mayor Alex Morse.

Heavy absentee voting may delay the determination of the victor in the race by several days or even a couple of weeks.

As chairman of the House committee that determines tax-policy, Neal was the lead architect of the muni-friendly provisions in the Moving Forward Act which passed the House in July with only three Republican votes in support.

The winner of Tuesday’s Democratic primary is expected to win in the November general election because there is no Republican running in the race for Neal’s seat.

In fact, Republican Gov. Charlie Baker of Massachusetts took the unusual step last week of endorsing Neal for re-election.

Should Neal win, he would be positioned to continue his strong support for the public finance sector in the next Congress.

Should he lose, Democrats on the Ways and Means Committee would select Neal’s successor among two or more of their most senior members sometime after the November election and before a new Congress takes office in January.

Under either outcome, the Moving Forward Act would continue to be the House Democrats' template for infrastructure development.

The legislation, which Senate Republican Majority Leader Mitch McConnell is blocking from consideration in his chamber, might at best get considered in a House-Senate conference negotiation if the Senate passes infrastructure legislation later this year.

If there is no progress on infrastructure legislation this year, the longer-term prognosis rests on whether Democrats gain majority control of the Senate and who wins the presidential election.

Democrats are widely expected to maintain majority control of the House and continue pursuing the Moving America Forward Act early next year.

The municipal bond provisions include a revision in the definition of bank-qualified bonds issued by small issuers to increase the limit to $30 million from $10 million and applying the limit at the borrower level.

It also would create a new program of $30 billion for qualified school infrastructure bonds through annual increments of $10 billion from fiscal 2020 through 2022.

There's also a provision for new direct-pay Qualified Infrastructure Bonds which would start with a federal 42% subsidy for interest expenses that would phase lower to 38% in 2025, 34% in 2027, and 30% permanently thereafter.

The legislation also would allow states to distribute up to 10% of their total bond limitation to enable local education agencies to support existing programs or public-private partnerships focused on expanding access to high-speed broadband to support digital learning.

Neal notably has been endorsed by Speaker Nancy Pelosi of California and former Rep. Barney Frank of Massachusetts, who in 1987 became the first member of Congress to voluntarily come out as gay. Frank’s endorsement is significant because Morse is also openly gay.

Morse, however, has benefitted from a backlash involving an Aug. 7 announcement by College Democrats of Massachusetts that they would not invite him to future events because his actions as a guest lecturer at the University of Massachusetts at Amherst have made some college students uncomfortable. Morse, 31, responded that any sexual encounters he had with college students in the past were entirely consensual.

Morse has the backing of Justice Democrats, a liberal political action committee that has successfully helped three other insurgent Democrats win primaries against House incumbents this election cycle, including Foreign Affairs Committee Chairman Eliot Engel of New York.

Justice Democrats backed seven winners in 2018 House races, including Rep. Alexandria Ocasio-Cortez of New York, who beat the No. 4 Democrat in the House leadership and who is now backing Morse in his race against Neal.

If Neal loses, contenders to succeed him as Ways and Means Committee chairman based on seniority include Reps. Lloyd Doggett of Texas, Mike Thompson of California, John Larson of Connecticut, and Earl Blumenauer of Oregon.

House Democrats give seniority more weight in selecting chairmen and ranking members than House Republicans do, but loyalty to Speaker Nancy Pelosi also carries weight.

Doggett supported Pelosi in 2002 over another Texas Democrat, former Rep. Martin Frost, in their contest to become the House Democratic leader.

In addition, Larson is a former member of Pelosi’s leadership team, which also could tip the scales in his favor.

Blumenauer, a leader on environmental issues, could attract support from the more liberal members of the Democratic caucus.

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State and local finance Election 2020 Tax-exempt bonds Refunding bonds School bonds Massachusetts Washington DC
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