Agenda - Council - 11/15/1983 - Special

Home

I I I I I I I I I 5) Denial of tax exemption for bonds issued with federal guarantees. 6) Other limitations. The House Ways and Means Committee bill went to the Rules Co~nnittee with a request that no amendments to the bill be permitted on the House floor, including the IDB provisions. A coalition of'Rules Committee members insisted that tbs IDB provisions be debated and amended when the bill Was on tbs House floor for a final vote. Rather than face the possibility of amendments to the IDB provisions, Congressman Rostinkowski withdrew bis request for floor consideration of tbs bill. (He hopes that pressure from other beneficiaries of tbs tax bill, particularly tbs insurance industry will pressure the Rules Committee to force a "closed rule" i.e., no amendments, in order that tbs other provisions of tbs tax bill be enacted before Congress recesses on November 19). WHAT THE SENATE MAY DO IF THE BILL IS APPROVED IN THE HOUSE Meanwhile, in the Senate, the Finance Committee is working toward a tax package. It appears, however, that the Senate-bill will not have an IDB section. Senate tax Committee Chairman Dole has not developed a consensus with regard to the final shape of a Senate tax proposal, but if the House passes a tax bill, the Senate could act on short notice and send a tax bill to a conference committee with representatives of the House Ways and Means Committee (who support IDB restrictions). DANGEROUS POSSIBILITIES FOR THE FUTURE OF IDBS The dangers at play here include the possibility that Congressman Rostenkowski will ultimately succeed in getting the tax bill to the House floor with no opportunity for significant amendments to be offered to the IDB provisions of the bill. The comprehensive tax proposal could then go to conference where representatives of the Senate Finance Committee might well agree to the entire Mouse IDB proposal and hammer out other compromises as well. Then both the-Mouse and the Senate would be faced with approving a final tax package of w~ich~ the IDB portion is only a small part, with enormous pressure to vote approval. In this event, the Congress would never have considered the IDB provisions in open session. Cities would simply be handed the final set of regulations and restrictions. STATE VOLUME CAPS AND ARBITRAGE SPELLS TROUBLE Perhaps the most damaging feature of the new IDB restrictions is the state volume. cap. Enactment of this regulation would mean that the Governor and the legislature would decide how to allocate the limited authority to issued. IDBs, first between the state and the cities, and secondly, among and between cities, counties, and urban townships. Minnesota already exceeds any of the proposed annual volume caps and would face extraordinarily difficult problems of how to cut back IDB programs throughout the state. It is also arguable that the new restrictions on arbitrage (which are patterned on restrictions in the Housing Revenue Bond legislation of a year and a half ago) would prevent many cities from issuing IDBs at all. WHY IT IS IMPORTANT NOT TO DELAY ACTION TO CONTACT MEMBERS OF CONGRESS. I I I Even though the proposed tax package would remove the sunset from Housing Revenue Bonds, it is difficult to see that this gain is worth the immediate loss and potential long-term struggle at the state level which would result from the enactment of the federal legislation. Cities should immediately inform their Congressmen and Senators of their opposition to the IDB regulations proposed in H.R. 4170. Please provide the League office copies of your correspondence and any feedback you receive.