WASHINGTON — A draft version of a Senate jobs bill widely circulated Tuesday included provisions that would allow several tax-credit bonds to be treated like Build America Bonds through the end of 2010, with issuers receiving a direct subsidy payment from the federal government instead of providing investors with a tax credit.
According to the 362-page draft, which was dated Feb. 9 and titled the “Hiring Incentives to Restore Employment Act,” the following tax credit bonds could be issued as direct subsidy bonds: new clean renewable energy bonds, qualified energy conservation bonds, qualified zone academy bonds, and qualified school construction bonds.
The document also includes an additional wrinkle in that it would grant small issuers a subsidy boost on the bonds. Under the proposal, any issuer that sold less than $30 million during the calendar year would receive payments equal to 65% of interest costs, while larger issuers would receive 45% payments.
Because the draft does not include a provision to make BABs permanent at a 28% subsidy rate, as the Obama adminstration proposed in its budget last week, one lobbyist cautioned that this may not be the final version of the bill.
When a jobs bill is introduced in the Senate, it would come on the heels of jobs legislation the House passed in December, which included provisions that would allow QSCBs and QZABs to be issued as BABs.
Although this Senate draft would apply to twice as many tax-credit bond programs as the House bill, it would offer a more meager subsidy. The House bill would offer subsidy payments at roughly the credit rate of the bonds, which is intended to cover 100% of interest costs.
The draft would extend transportation programs that were authorized by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users, or SAFETEA-LU, until Dec. 31. It also would provide funding for the highway trust fund by repaying “foregone interest” that it has been legally unable to earn on its revenues. It would give the fund $14.7 billion for highways and $4.8 billion for mass transit, and would restore the fund’s ability to earn interest.
It also would take care of a complication in the federal funding process by setting an “obligation limitation,” or the amount that states can obligate, at $10.7 billion from Oct. 1 to Dec. 31. Staff of the Senate Finance Committee, which is charged with drafting tax provisions for any jobs legislation, could not be reached yesterday to confirm whether the document was official or not. But the draft was widely circulated among lobbyists and market participants.
Andrew Ackerman and Audrey Dutton contributed to this story.