Highway bill could bring back BABs: aide

WASHINGTON (Reuters) - Legislation laying out how the U.S. government will fund surface transportation projects could provide a vehicle for bringing Build America Bonds back after they expire at the end of this month.

The incoming Republican chairman of the House of Representatives Transportation Committee, John Mica, of Florida, could include a financing program similar to taxable BABs, which were created in last year’s stimulus plan to promote infrastructure and job creation, a spokesman said.

The spokesman, Justin Harclerode, said “it’s one of many things he’s looking at and willing to consider,” in drafting a transportation bill.

Harclerode said Mica does not intend to introduce a stand-alone bill resurrecting the BABs program and the bonds may take a different form if they are included in the transportation legislation.

“He’s not ready to drop BABs as they are into this bill,” Harclerode said.

Currently, BABs pay issuers a federal rebate of 35 percent on interest costs, a level critics say is too high.

Road and transit construction programs have been funded through short-term extensions since the previous highway financing law expired in September 2009.

The Democratic-led Congress agreed with the Obama administration and deferred consideration of a new permanent funding bill until after the November elections. Lawmakers are now gearing up to weigh proposals in early 2011.

However, highway bills tend to take months and even years to wend their way through Congress. The next bill is expected to address several issues that could drag out the process -- including how projects should be financed.

Reporting by Lisa Lambert and John Crawley; Editing by James Dalgleish