On November 9, 2017, the U.S. Senate’s Joint Committee on Taxation released its Chairman’s mark of the “Tax Cut and Jobs Act,” a version of which was unveiled by the House of Representatives on November 2.  (See our November 7 Public Finance Advisory, House Tax Bill Eliminates Private Activity Bonds, Advance Refundings, available here).  The markup of the proposed bill by the Senate Finance Committee is scheduled to begin November 13, 2017.

The Senate’s version of the bill differs markedly from the House’s version of the bill, but nonetheless maintains certain provisions that would limit activity in the municipal markets.  Namely, the Senate’s bill retains the House’s repeal of advance refunding bonds, a refunding vehicle where refunding bonds are issued more than 90 days prior to the redemption date of the refunded bonds.  Advance refunding bonds have made up a significant portion of all municipal financing issues in the last several years. However, the Senate’s proposal does not maintain the House bill’s repeal of the tax-exempt status for private activity bonds or bonds issued to finance professional sports stadiums or arenas.

Both the full House and Senate are expected to hold a vote on their bills later this month. Even if both chambers pass their respective versions, the House and Senate will need to engage in negotiations regarding any inconsistent terms and ultimately vote to pass identical bills in order to enact the measure into law.  The President must ultimately sign the bill, and President Trump has indicated that he hopes to do so by the end of the year. The text of the Senate’s draft is available here.