Pushing the Build Back Better legislation into the New Year marks a fresh lobbying opportunity for the municipal market but it comes amid diminishing odds for the legislation itself to survive.
Senate Majority Leader Chuck Schumer had hoped to push the $1.75 trillion legislation through the Democrat-controlled Senate by Christmas. But various obstacles, chiefly negotiations with moderate Democrat Sen. Joe Manchin of West Virginia, stalled the measure. President Joe Biden Thursday evening acknowledged the bill will have to wait until 2022.
"It takes time to finalize these agreements, prepare the legislative changes, and finish all the parliamentary and procedural steps needed to enable a Senate vote," Biden said. "We will advance this work together over the days and weeks ahead; Leader Schumer and I are determined to see the bill successfully on the floor as early as possible."
The House
For the municipal bond market, the delay means more time to lobby for its wish list. Muni priorities, including the restoration of tax-exempt advance refundings as well as a direct-pay bond program and expanded bank qualified debt, were stripped out of an early House version as the bill was cut down from $3.5 trillion.
"As the Senate considers deliberations on policy contents of the BBB, we implore policy makers to reassess inclusion of muni provisions that were included in the original draft legislation,” said Brett Bolton, vice president of Federal Legislative and Regulatory Policy at the Bond Dealers of America.
“As space under the $1.75 trillion dollar cap continues to grow as the parliamentarian rules on certain provisions, we ask that infrastructure financing provisions such as the reinstatement of tax-exempt advance refundings be included in the final package next year.”
The bill’s cap of $1.75 trillion could be opened up if some provisions are taken out. For example, the Senate parliamentarian Thursday ruled immigration provisions, costing $100 billion over 10 years, are ineligible for inclusion in the reconciliation bill.
“From the point of view of a sector whose priorities are left out of the bill, extending the debate into next year provides opportunities,” said Charles Samuels of Mintz Levin, counsel to the National Association of Health & Educational Facilities Finance Authorities. “But it won’t happen by itself and requires vigorous advocacy. I also think the political reality is that the future of this bill is now diminished and it is likely it will get smaller not bigger. But there are always miscellaneous provisions that slip in, so there is no reason to give up.”
There’s a chance the muni concerns could be included in two other legislative vehicles on the table: an extenders’ bill, a measure that extends expiring tax provisions, or a spending omnibus bill if it includes a tax title, said Emily Brock, legislative liaison for the Government Finance Officers Association.
Brock added the BBB delay was “disappointing but not hugely surprising.”
“I think one opportunity that this does provide is another bite at the apple for many of the provisions in the BBB and for those that got negotiated out,” she said. “It’s become pretty clear through all of the infrastructure discussions in 2021 that we are a bipartisan issue with bipartisan support.”
