WASHINGTON, July 28 U.S. Senator Ron Wyden on
Thursday introduced long-awaited infrastructure financing
legislation that presents a grand departure from the popular
Build America Bonds program that expired seven months ago.
Wyden's bill will likely be folded into a larger, long-term
spending authorization for roads, bridges and highways.
In lieu of tax-exempt interest payments, the bonds would
pay investors annual credits against their taxes. They would be
issued by state infrastructure banks and capped at $50 billion
over six years.
Wyden, a Democrat from Oregon, said the bonds would
"leverage private funding in a fair and efficient (way) that
has been proven to save taxpayer money."
Sen. John Hoeven, a Republican from North Dakota, and Sen.
Mark Begich, a Democrat from Alaska, co-sponsored the
Many in the U.S. municipal bond market had hoped Wyden
would revive the Build America Bonds structure, which gave
issuers federal rebates for the taxable bonds they sold. From
April 3, 2009, through Dec. 31, 2010, state and local
governments sold 2,275 BABs equal to $181 billion.
Issuers had had the option of selling BABs as tax-credit
debt under the stimulus plan -- an option that no state or
local government selected. The U.S. government has offered
other tax-credit bond programs that both the market and issuers
Republican resistance to reviving BABs has been strong,
with members of both houses questioning whether the bonds were
used for infrastructure and if the steep rebates -- equal to 35
percent of interest costs -- rewarded profligate states.
President Barack Obama has suggested making BABs a
permanent program, albeit with a much lower subsidy. But moves
in Congress to bring BABs back have fizzled.
Analysts say that tax credits, instead of tax exemptions on
interest payments, are much cheaper for the U.S. government.
According to Wyden's proposal, the Transportation and
Regional Infrastructure Project, or "TRIPs," bonds would not
require an offsetting tax increase and would cost the federal
government $12.3 billion. It would rely on $900 million from
customs user fees that would be deposited into a trust fund.
With the nation's roads and bridges deteriorating, the
federal government is scrounging for money to pay for massive
repairs. The American Society of Civil Engineers said this week
the country will need to invest roughly $220 billion annually
to maintain U.S. infrastructure in "minimum tolerable
The tax charged on gasoline sales frequently cannot cover
those costs and Congress, in the midst of a debt and deficit
fight, is resistant to spending increases.
House of Representatives Transportation Committee Chairman
John Mica has yet to introduce his legislation for authorizing
transportation spending. But outlines he released earlier this
month show it also emphasizes pushing programs through state
infrastructure banks. A little less than two-thirds of the
states -- 32 -- have infrastructure banks.
The previous $285 billion, five-year authorization expired
in 2009 and Congress has relied on a patchwork of short-term
extensions as it debates the next round of authorization. The
current extension ends Sept. 30.
The country spends about $160 billion annually on highways
alone, with roughly $40 billion coming from the federal
government, according to the Congressional Budget Office.
(Reporting by Lisa Lambert; Editing by Dan Grebler)