Legislation introduced in April by Sen. Ed Markey (D-Mass.) would establish a permanent version of the temporary Build America Bonds (BAB) program that offered subsidies for water and other infrastructure. The “Bolstering Our Nation’s Deficient Structures (BONDS) Act” (S. 2203) would initially offer municipal bond issuers a 31 percent subsidy on interest paid to bondholders for qualifying projects. The subsidy would decrease by one percent each year for new issues until 2017, when it would level off at 28 percent for all qualifying bonds issued after that date. The original BAB program, which was enacted through economic stimulus legislation in 2009, offered a 35 percent subsidy until the program expired in 2010.
The BONDS Act includes a provision that would prevent any future rounds of federal sequestration cuts from reducing subsidies owed under the program. This responds to a major complaint of BAB issuers, who have seen their subsidies collectively reduced by hundreds of millions of dollars over the past few years.
A copy of the Bonds Act is available at www.markey.senate.gov/imo/media/doc/2014-04-03_BondsAct.pdf.