By Larry Jones
September 13, 2004

Although legislation has cleared both houses of Congress that would effectively shut down sales' leaseback financing, there is growing doubt that a final compromise can be reached before Congress adjourns in early October. With so little time remaining, a Senate aide told US Mayor the week of September 6 that action on a final corporate tax bill (H.R. 4520), which includes provisions imposing strict limits on sale lease-back financing, will most likely be delayed until after the November elections. While a decision on scheduling a lame duck session was pending at press time, congressional leaders were leaning towards reconvening in mid November to take action on critical legislation such as the corporate tax bill and the annual appropriations bills that fund most federal agencies and programs.

Also by delaying action on the measure, congressional leaders will ease the pressure on members by putting off a number of difficult votes on politically charged issues until after the election, including how to pay for the huge corporate tax cuts. The Senate version will provide $174 billion in corporate tax cuts, which would be totally offset with revenue increases. The House version, on the other hand would provide $145 billion in corporate tax relief and all but $34 billion would be offset with revenue increases.

Mayors and other local leaders have voiced strong support for the continuation of sale-leaseback financing, which has been used by cities to help finance transportation and other huge infrastructure projects. But criticisms by the Treasury Department last fall that domestic and foreign investors were abusing the system at the expense of U.S. taxpayers led the agency to suspend the approval of all pending and new sale-leaseback proposals. The Conference of Mayors has urged Congress to permit pending proposal to move through the approval process and to allow for the continuation of sale-leaseback financing with changes addressing the problems.

The House version of the bill, H.R. 4520 will allow for pending proposals to move through the approval process, while the Senate version (S. 1637) will not. Also Rep. Jim McCrery (LA) is considering offering an amendment that will allow the continuation of sale-leaseback financing on a more limited basis.