[Congressional Record Volume 149, Number 52 (Tuesday, April 1, 2003)]
[Senate]
[Pages S4639-S4640]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THOMAS (for himself and Mr. Gregg):
  S. 756. A bill to amend the Internal Revenue Code of 1986 to modify 
the qualified small issue bond provisions; to the Committee on Finance.
  Mr. THOMAS: Mr. President, I am pleased to rise to introduce 
legislation with my distinguished colleague from New Hampshire, Mr. 
Gregg. Specifically, the bill we offer today would amend the Internal 
Revenue Code of 1986 to modify the qualified small issue bond 
provisions. Current restrictions built into the law decades ago prevent 
small manufacturers from realizing the full financial benefit from 
these bonds.
  The manufacturing sector is a key component of the U.S. economy. It 
was particularly hard-hit in the most recent recession and continues to 
struggle. More than two million high-wage, quality jobs have been lost. 
These losses occurred in both large and small manufacturing facilities. 
Reversing the decline is critical for our Nation's economic well-being.
  This bill targets a problem faced by many small manufacturers: the 
lack of investment capital. These manufacturers need access to 
financial resources to build, to grow, to employ new workers and to 
survive. One of the lowest-cost capital investment options currently 
available is tax-exempt Industrial Development Bonds or IDBs. These 
bonds are issued by state governments throughout the country and 
provide an excellent financial resource for companies looking to build 
or expand their manufacturing facilities.
  The maximum IDB available for qualified projects was set in 1978 at 
$10 million. The purchasing power of that amount has declined by more 
than fifty percent over time, severely reducing the effectiveness of 
this financial tool. In addition, the ten million dollar ceiling is 
subject to a dollar reduction for other funding used in the project. 
These limits create a significant and unnecessary barrier. To help 
small manufacturers and acknowledge the technological advances made in 
the past 25 years, it is time to change the law.
  This bill makes the necessary changes to ensure that the law reflects 
economic realities. It increases the bond cap and capital expenditure 
amounts from ten to twenty million dollars. An inflation adjuster is 
added to avoid a similar reduction in purchasing power in the future. 
Finally, we would expand the definition of manufacturing facilities to 
capture new technologies, namely biotech and software production.
  Many factors are responsible for the current decline in the 
manufacturing sector. Our bill will not solve all the problems, but it 
does break down the capital investment barrier facing many small 
manufacturers. These businesses, and the communities in which they are 
located, need our help. This proposal will go a long way in achieving 
that objective and I urge all my colleagues to become a cosponsor.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 756

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. MODIFICATIONS TO SMALL ISSUE BOND PROVISIONS.

       (a) Increase in Amount of Qualified Small Issue Bonds 
     Permitted for Facilities To Be Used by Related Principal 
     Users.--
       (1) In general.--Clause (i) of section 144(a)(4)(A) 
     (relating to $10,000,000 limit in certain cases) is amended 
     by striking ``$10,000,000'' and inserting ``$20,000,000''.
       (2) Cost-of-living adjustment.--Section 144(a)(4) is 
     amended by adding at the end the following:
       ``(G) Cost-of-living adjustment.--In the case of a taxable 
     year beginning in a calendar year after 2002, the $20,000,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment under section 1(f)(3) 
     for the calendar year in which the taxable year begins, 
     determined by substituting `calendar year 2001' for `calendar 
     year 1992' in subparagraph (B) thereof.''.
       (3) Clerical amendment.--The heading of paragraph (4) of 
     section 144(a) is amended by striking ``$10,000,000'' and 
     inserting ``$20,000,000''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to--
       (A) obligations issued after the date of the enactment of 
     this Act, and
       (B) capital expenditures made after such date with respect 
     to obligations issued on or before such date.
       (b) Definition of Manufacturing Facility.--
       (1) In general.--Section 144(a)(12)(C) (relating to 
     definition of manufacturing facility) is amended to read as 
     follows:
       ``(C) Manufacturing facility.--For purposes of this 
     paragraph, the term `manufacturing facility' means any 
     facility which is used in--
       ``(i) the manufacturing or production of tangible personal 
     property (including the processing resulting in a change in 
     the condition of such property),
       ``(ii) the manufacturing, development, or production of 
     specifically developed software products or processes if--

       ``(I) it takes more than 6 months to develop or produce 
     such products,
       ``(II) the development or production could not with due 
     diligence be reasonably expected to occur in less than 6 
     months, and
       ``(III) the software product or process comprises programs, 
     routines, and attendant documentation developed and 
     maintained for use in computer and telecommunications 
     technology, or

[[Page S4640]]

       ``(iii) the manufacturing, development, or production of 
     specially developed biobased or bioenergy products or 
     processes if--

       ``(I) it takes more than 6 months to develop or produce,
       ``(II) the development or production could not with due 
     diligence be reasonably expected to occur in less than 6 
     months, and
       ``(III) the biobased or bioenergy product or process 
     comprises products, processes, programs, routines, and 
     attendant documentation developed and maintained for the 
     utilization of biological materials in commercial or 
     industrial products, for the utilization of renewable 
     domestic agricultural or forestry materials in commercial or 
     industrial products, or for the utilization of biomass 
     materials.

       ``(D) Related facilities.--For purposes of subparagraph 
     (C), the term `manufacturing facility' includes a facility 
     which is directly and functionally related to a manufacturing 
     facility (determined without regard to subparagraph (C)) if--
       ``(i) such facility, including an office facility and a 
     research and development facility, is located on the same 
     site as the manufacturing facility, and
       ``(ii) not more than 40 percent of the net proceeds of the 
     issue are used to provide such facility,
     but shall not include a facility used solely for research and 
     development activities.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
                                 ______