WASHINGTON — The Senate voted 74 to 22 on Wednesday to approve a two-year, $109 billion highway reauthorization bill that would increase the limit for bank-qualified bonds to $30 million from $10 million.
The bill also would prohibit private-activity bonds from being used for certain toll roads already financed under public-private partnership contracts. But a continuing impasse in the House means lawmakers still have a long road to navigate before producing the first long-term surface transportation legislation since the last one expired on Sept. 30, 2009.
The bill, sponsored by Sens. Barbara Boxer, D-Calif. and James Inhofe, R-Okla., had been held up on the floor for more than a month as Republicans and Democrats debated amendments, many of which were not transportation-related.
Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., eventually reached an agreement that allowed the amendment process to go forward and led to the ultimate passage of the bill. Most of the unrelated amendments failed, due to an agreement between the leaders that they would require 60 votes to gain approval.
Boxer added a provision from the Senate Finance Committee that would allow banks to deduct 80% of the cost of buying and carrying tax-exempt bonds sold by issuers whose annual issuance is $30 million or less. The provision would take effect between June 2012 and July 2013. It would also allow the limit to be applied on a borrower-by-borrower basis in conduit deals.
“We’re delighted that it’s in there,” said Charles Samuels, a member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC. “Our goal is to make it permanent.”
Susan Gaffney, director of the Government Finance Officers Association’s federal liaison center, said GFOA has been pushing for the increase “literally for decades” and hopes the House will eventually approve it.
Some transportation-related amendments sparked sharp divides and close votes, such as one by Sen. Jeff Bingaman, D-N.M., to deny private-activity bond financing to certain P3s. That amendment would prevent PAB financing for so-called brownfield concessions, which are dilapidated infrastructure systems, including toll roads leased by private companies.
“We’ve had some scuffles along the way, but that’s what the Senate is all about,” Reid said.
“To navigate this bill was really difficult,” Boxer said.
Despite the measure’s easy passage, legislators have a long way to go before reaching agreement on a first multi-year bill. The Republican-controlled House rolled out a five-year, $260 billion bill sponsored by House Transportation Committee chairman John Mica, R-Fla., to great fanfare last month, but proposals eliminating dedicated transit funding and providing for more domestic oil drilling drew strong opposition. House Speaker John Boehner, R-Ohio, has said Republicans will either push forward with a slightly revised version of Mica’s bill, or possibly take up the Senate bill.
Either way, the fast-approaching March 31 expiration of the current law means a short-term extension is near-certain. A House staffer said time constraints would make passing a bill in the next two weeks problematic even if the House took up the Senate bill as is. Failure to pass either an extension or a long-term bill would cut off federal money to projects nationwide and cost the government millions or billions of dollars in lost gas tax revenue.
