House eyes post-Katrina aid to muni bond issuers
WASHINGTON (Reuters) – U.S. House lawmakers are examining
possible aid to municipal bond issuers to keep them from
defaulting as their tax revenues falter in the wake of
Hurricane Katrina, a prominent member of the House Ways and
Means Committee said on Wednesday.
“We’re also looking obviously at some sort of direct
federal aid to the public entities that have no revenue but
have to service the revenue bonds,” Rep. Jim McCrery, a
Louisiana Republican, told reporters in a Capitol hallway.
The National Association of Bond Lawyers last week proposed
that the Treasury Department provide cash advances to bond
issuers whose revenue stream was damaged by Hurricane Katrina,
which would be repaid over 10 years.
McCrery, who is chairman of the social security
subcommittee of the Ways and Means tax-writing panel, said some
kind of tax legislation to address the possible bond defaults
was also being considered.
“We’re looking at a variety of ways to solve that problem.
Clearly, it’s got to be addressed,” McCrery said.
Asked whether the relief could be granted to bond issuers
at entities such as the Houston Astrodome, where many evacuees
from the storm are staying, McCrery said: “Any public entity
that has been deprived of revenue because of the disaster,
should be looked at, in terms of some sort of assistance to get
them over the temporary need.”
House Speaker Dennis Hastert, asked separately about
possible bond defaults because of Katrina, said, “we’re looking
at all these issues.”
In the Senate, some members from the Gulf Coast said on
Tuesday they were working on measures to prevent defaults by
municipal and county bond issuers who have no tax base at the
Sen. Trent Lott, a Mississippi Republican, said Congress
needed to decide whether to create a pool of funds from which
issuers could draw to meet debt payments, or to provide relief
through tax legislation.
As of Tuesday, no bond issuers in Louisiana, Mississippi,
and Alabama and Florida had filed a notification of default or
payment delinquency since September 1, according to DPC Data
Inc., one of the national information repositories for