NABL urges Treasury to fill legislative counsel position
The Treasury Department is lacking the technical expertise in its Office of Tax Policy that would be needed to implement the major sections of infrastructure legislation envisioned by House Democrats.
That’s because the position of associate tax legislative counsel, a person who is assigned to focus on tax-advantaged bonds, has been vacant since November.
The National Association of Bond Lawyers sent a letter to the Treasury on Wednesday asking the department to fill that position, which formerly was held by John Cross III.
Cross, 63, left the position in November to move to Connecticut for family reasons.
This was the second stint for Cross as Treasury’s top municipal finance tax attorney, playing an influential role in drafting regulations and guidance for the public finance sector.
Cross also played an important role in drafting the 2009 economic stimulus legislation that created several types of new direct-pay bonds that included the popular Build America Bonds.
House Democrats recently released a framework for major infrastructure legislation that includes restoration of Build America Bonds and advance refunding for municipal bonds. The $760 billion, 5-year plan also calls for expanding qualified private activity bonds and reinstatement of tax credit bonds.
Municipal bond industry advocates have urged members of Congress that any revival of BABs should include legislative language shielding them from sequestration cuts in their direct-pay subsidies.
Drafting and implementing those provisions would require expert advice from the Treasury’s Office of Tax Policy by an attorney serving as a successor to Cross.
But NABL isn’t aware of any active attempt by Treasury to fill the position, according to NABL President Richard Moore, a tax partner at the San Francisco headquarters of Orrick.
“The point is not so much as to say we need this right now, as to say we have a history of always having a subject matter expert on municipal bonds and the tax aspect of municipal bonds in that position to work on legislation,” Moore said. “We felt it has benefited the industry and benefitted the federal government and we would like to see that continue.”
Moore said he has “no inkling as to what their plans are and don’t want to sound an alarm bell,” but wanted to highlight a personnel issue that should be important in the medium to long term.
Johnny Hutchinson, a public finance partner at Squire Patton Boggs in Houston who chairs NABL’s tax law committee, said he’s “heard there might be some initial thoughts about moving some of John [Cross’s] work onto the plate of other folks who specialize in work in other areas of the tax law.”
“So we wanted to voice our opinion that that might not be the most efficient thing,” Hutchinson said, noting that Cross’s expertise ensured that “regulations could be drafted in a way that makes sense and that regulations could be complied with in a way that wouldn’t unduly burden market participants.”
House Transportation and Infrastructure Committee Chairman Peter DeFazio, D-Ore., has said he will release a draft of his surface transportation bill by the end of this month and move it through committee in April.
The revenue to pay for that legislation is the responsibility of the House Ways and Means Committee which will vote on the tax policies needed to finance the infrastructure.
Hutchinson said it’s important for Treasury to have the expertise to help lawmakers.
“Let’s say advance refunding comes back, but maybe the legislation isn’t just a quick undo in Microsoft Word,” said Hutchinson. “Then that legislative task of implementing the legislation could get assigned to someone who has no experience in the tax-exempt bond world. Advance refundings are kind of a unicorn that people who don’t play in this area understand a lot.”