7984-1:N:02/26/1998:MCS/hh LRS 1998-2125

REQUESTING CONGRESS TO ENACT LEGISLATION TO INCREASE THE VOLUME LIMITS FOR THE ISSUANCE OF PRIVATE ACTIVITY TAX-EXEMPT BONDS.

WHEREAS, private activity tax-exempt bonds finance many worthy projects with a public benefit such as environmental infrastructure projects, including sewage facilities, solid waste disposal facilities, hazardous waste disposal facilities, industrial development projects, student loans, and low-income housing projects; and

WHEREAS, in 1988, Congress lowered the volume cap on the issuance of such bonds to $50 per person, even though this cap is lower than the 1986 cap originally established, which fails to factor in the passage of time and inflation; and

WHEREAS, many of these worthy projects are not going forward due to the lack of available financing; and

WHEREAS, while taxable financing may be available, the cost of such financing can make a project economically unfeasible because most of these projects do not provide a positive rate of return; and

WHEREAS, the allocation of these bonds in Alabama has been oversubscribed for many years, and in 1997, applications exceeded allocations by a large percentage; and

WHEREAS, demand for private activity bond cap allocation will certainly continue to increase, given Alabama's growing economy, but the $50 per person allocation will decrease in real value over time, increasing demand relative to the available ceiling; and

WHEREAS, unless Congress increases the volume cap and provides an inflation adjustment for the future, there will be fewer and fewer of these projects that will receive financing; and

WHEREAS, as entities decide to delay or cancel planned investments, economic growth will necessarily slow, causing negative ripple effects throughout the economy; and

WHEREAS, legislation has been introduced in the Congress of the United States that would increase the volume caps and index them for inflation in the future; now therefore,

BE IT RESOLVED BY THE LEGISLATURE OF ALABAMA, BOTH HOUSES THEREOF CONCURRING, That we hereby respectfully request the Congress of the United States to enact legislation that would increase the volume caps on private activity tax-exempt bonds.

RESOLVED FURTHER, That we request Congress to consider the impact of inflation in any future legislation concerning this issue.

RESOLVED FURTHER, That we request Congress to consider that funds for this program that are not used by other states should be allowed to be allocated to oversubscribed states such as Alabama.

RESOLVED FURTHER, That copies of this resolution be provided to the President of the United States, the Speaker of the House of Representatives and the President of the Senate of the United States Congress, and to all the members of the Alabama delegation to Congress with the request that this resolution be officially entered on the Congressional Record as a memorial to the Congress of the United States of America.

Resolution, Legislative

U. S. Congress

Bonds