PRINTER'S NO. 581
No. 50 Session of 2003
INTRODUCED BY DENT, EARLL, M. WHITE, ERICKSON, WONDERLING,
PILEGGI, ORIE, TOMLINSON, RAFFERTY, THOMPSON, KUKOVICH,
TARTAGLIONE, COSTA, WOZNIAK, MUSTO, O'PAKE, STACK, BOSCOLA
AND KASUNIC, MARCH 24, 2003
REFERRED TO FINANCE, MARCH 24, 2003
A RESOLUTION
1 Urging the President and Congress of the United States to
2 restructure the requirement in section 149(d) of the Internal
3 Revenue Code of 1986, either legislatively or by regulation,
4 to ease the limits on the refinancing of long-term debt and
5 on the advance refunding of private activity bonds by state
6 and local governments.
7 WHEREAS, As state and local governments begin working on
8 their annual budgets, they are faced with weighing the
9 unpalatable choices of program cuts, tax hikes or both to make
10 up budget shortfalls as a result of the sluggish economy; and
11 WHEREAS, In 1986 the Congress of the United States added a
12 limitation to the Internal Revenue Code of 1986 providing that
13 state and local governments can refinance long-term debt
14 (municipal bonds) only once so that a flood of tax-exempt
15 municipal bonds would not deprive the United States Treasury of
16 tax revenue; and
17 WHEREAS, Many state and local governments refinanced their
18 long-term debt during the 1990s to take advantage of the lower
19 interest rates at that time; and
1 WHEREAS, The slowdown in the economy has led to even lower
2 interest rates and provides the potential for state and local
3 governments to refinance currently outstanding debt at
4 historically low-interest rates and may hold the answer
5 governments are looking for in an attempt to save badly needed
6 funds; and
7 WHEREAS, By Federal law, those same governments now have only
8 one opportunity to take advantage of favorable market conditions
9 and achieve lower borrowing costs; and
10 WHEREAS, Section 149(d) of the Internal Revenue Code of 1986
11 also prohibits the advance refunding of all private activity
12 bonds, other than qualified section 501(c)(3) bonds, if the
13 bonds are to maintain their tax-exempt status; and
14 WHEREAS, Private activity bonds are commonly used by state
15 agencies and local governments to finance important initiatives
16 such as housing and redevelopment projects; and
17 WHEREAS, Current economic uncertainties increasingly pinch
18 state and local government budgets compounded by the increased
19 and unforeseen burdens of funding safeguards against terrorism;
20 and
21 WHEREAS, In order to provide state and local governments with
22 the tools and flexibility they need to face these changing
23 circumstances, additional opportunities are needed to advance
24 the refunding of outstanding debt; therefore be it
25 RESOLVED, That the Senate of the Commonwealth of Pennsylvania
26 urge the President and the Congress of the United States to
27 restructure the requirement in section 149(d) of the Internal
28 Revenue Code of 1986, either legislatively or by regulation, to
29 afford state and local governments the flexibility they need to
30 take advantage of favorable market conditions by providing
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1 additional opportunities to advance the refunding of outstanding
2 long-term debt; and be it further
3 RESOLVED, That copies of this resolution be transmitted to
4 the President of the United States, to the presiding officers of
5 each house of Congress and to each member of Congress from
6 Pennsylvania.
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