“America Fast Forward” Proposed As New Bonding Option

Among several components of a Presidential jobs-focused initiative unveiled this week by the White House is a new bonding vehicle for state and county governments. The “America fast Forward” bond concept would authorize taxable borrowing for a wider scope of projects than the recent short term “Build America Bonds,” whose authiroty recently expired.

From the White House fact sheet:

Enact America Fast Forward Bonds: Recovery Act funding for “Build America Bonds” (BABs) helped to support more than $181 billion for new public infrastructure. The program’s innovative design ensured that all taxpayers—and not just the wealthiest—received the best bang-for-the-buck when the federal government helped states, localities, and their private sector partners invest in new infrastructure. The President’s new America Fast Forward (AFF) bonds program would build upon the successful example of the BABs program, broadening it to include similar programs like the qualified private activity bonds program and relaxing certain limitations in the way the combined program could be used. AFF bonds would attract new sources of capital for infrastructure investment—including from public pension funds and foreign investors that do not receive a tax benefit from traditional tax-exempt debt.

Coverage in Bond Buyer magazine focuses on the potential market for these securities, and the context for these issue among the broader fiscal debates in Washington:

But even if AFF bonds are proposed with a lower subsidy rate, it’s unlikely they will gain much momentum in Congress before lawmakers hash out a comprehensive deficit reduction plan.

Bill Daly, director of governmental affairs for the National Association of Bond Lawyers, said it is encouraging the White House recognizes the importance of state and local governments, but he isn’t optimistic the proposal will move forward until the federal deficit reduction is resolved. “This would have to be taken up in a tax bill and that seems unlikely,” he said.

Within the next few months, Congress must decide whether to stop the $85 billion in automatic, across-the-board budget cuts set to go into effect on March 1, agree to a continuing resolution to keep the government funded past March 27, and decide whether to raise the nation’s debt ceiling again, which has been suspended until May 19.

Michael Sanderson

Executive Director Maryland Association of Counties