Recently introduced legislation extending several temporary bond provisions is not expected to be voted on by the House until September at the earliest, despite attempts from Democratic leaders to move quickly on the measure.
House lawmakers debated the Investing in American Jobs and Closing Tax Loopholes Act — HR 5893 — late Thursday, and the bill appeared to be advancing to a vote. However, the measure, introduced by Ways and Means Committee chairman Sander Levin, D-Mich., was eventually tabled and will be addressed later, according to congressional sources.
The bill was not scheduled for a vote Friday, and the House begins a lengthy recess today. The soonest the bill is likely to be considered would be Sept. 14, when lawmakers return from their summer vacation.
However, market participants had been anticipating a wait for the bill’s final approval, because if passed by the House, it still would have needed to be passed by the Senate, which was not expected to take it up before its recess beginning Aug. 6. A similar legislative package had been passed by the House in June, but ultimately stalled in the Senate.
The highest-profile extension in Levin’s bill is to the Build America Bonds program, which would be extended two years through 2012. The bill would gradually reduce the subsidy rate for BABs from the current 35% level to 32% for bonds sold in 2011 and 30% for those sold in 2012. The measure also would extend by one year, through 2011, the greater small-issuer exemption for bank-qualified bonds.
The 2009 American Recovery and Reinvestment Act modified the tax law to allow banks to deduct 80% of the costs of buying and carrying tax-exempt debt sold by borrowers whose annual issuance did not exceed $30 million, up from the previous $10 million limit. It also allowed for the $30 million limit to be applied to individual borrowers participating in conduit deals, rather than at the conduit issuer level.
The Levin bill would extend for one year the programs for recovery zone economic development bonds and recovery zone facility bonds and would allocate an additional $10 billion and $15 billion, respectively, to the two programs. The bond authority would be allocated using a new formula that would guarantee each locality receives a minimum allocation based on its share of national unemployment as of December 2009.
The bill would extend for one year, through 2011, the exemption from the alternative minimum tax for all private-activity bonds, including those issued to refund debt sold after 2003. It also would exempt water and sewer exempt-facility bonds from state volume caps for PABs, and allow Federal Home Loan Banks to guarantee tax-exempt bonds through 2011.