WASHINGTON — Presidential candidate Sen. Amy Klobuchar, D- Minn., said she will support authorizing Move America Bonds and promised to bring back Build America Bonds as part of a trillion dollar infrastructure plan.
The presidential hopeful supported the bond programs in a seven point plan written
In response to Klobuchar’s plan, National Association of Bond Lawyers President Dee Wisor said an infrastructure plan needs to include direct-pay subsidies like those in the BAB program. Direct-pay BABs offered issuers a 35% federal subsidy on the interest owed investors, but the authority to issue them ended in 2010..
But Wisor added that any such program would need to be shielded from sequestration cuts. Many issuers felt betrayed when their subsidy payments began to be cut in 2013 as part of austerity legislation approved by Congress. The percentage of the cut is determined each new fiscal year, and is 6. 2% in fiscal 2019.
“I am hopeful that whatever infrastructure package is adopted by Congress, if one is adopted, will include some kind of direct-pay opportunity,” Wisor said.”It will have to be something that protects the subsidy from sequestration in the future.”
NABL recently submitted written testimony to the House Ways and Means Committee, proposing creating a new category of direct-pay bonds, calling them Enhanced Infrastructure Bonds. Wisor said they would be similar to BAB’s and would feature a direct-pay subsidy.
The Securities Industry and Financial Markets Association said it supported commitments to infrastructure investment and has long advocated for cooperation between public and private parties.
“SIFMA strongly believes partnerships among federal, state and local governments and private investors to leverage our capital markets through expanded financing options, including private activity and direct-pay bonds, are crucial to facilitating a large scale investment in infrastructure,” Ken Bentsen, SIFMA president and CEO wrote in an email.
The Government Finance Officers Association believes sequestration-proof direct pay bonds in a future package with advance refunding and a higher cap on bank qualified bonds would help address infrastructure, Emily Brock, director of the GFOA’s federal liaison’s center wrote in an email.
“We look forward to working with our leaders in Washington to craft that package and are glad to see attention directed toward infrastructure,” Brock wrote.
Sens. John Hoeven, R-N.D. and Ron Wyden, D-Ore. Reintroduced the Move America Act this year, a bipartisan proposal to expand tax-exempt private activity bonds and establish a new federal infrastructure tax credit to encourage private-public partnerships. Move America Bonds, which the bill would create, would generally be treated as exempt facility bonds under current law, with some exceptions.
At a hearing Wednesday, Hoeven asked U.S. Department of Transportation Secretary Elaine Chao if she would support his bill.
Though Chao didn’t say if she would support the bill, she did endorse private funding for infrastructure through public pensions and endowment funds.
Pundits generally consider Klobuchar unlikely to win her party's nomination, though the campaign is in an early stage. She is running eighth in the crowded Democratic primary field according to the Real Clear Politics average of five national polls conducted this month.
