Grassley's measures were included in a package of education savings incentives and other education-related tax proposals adopted late yesterday by the Senate in a 61 to 37 vote. Last year, Grassley moved his proposals through the Finance Committee, of which he is a senior member.
"My goal is to give prompt assistance to schools that need money for repairs and construction," Grassley said. "My proposals give expanded flexibility and incentives for investment that could help school districts in Iowa and across the country."
Nationwide, tax-exempt bonds finance about 90 percent of investment in public schools. In Iowa, more than $625 million in tax-exempt bonds were issued to school districts in 1998 alone.
The first Grassley item passed by the Senate would permit school districts to employ public-private partnerships for school construction and rehabilitation projects financed by tax-exempt bonds. The proposal could mean close to $30 million more for Iowa in new school construction or rehabilitation. Under current law, public school construction is one of the only types of infrastructure investment where tax-exempt bonds cannot be used in conjunction with public-private partnerships. Grassley introduced this measure in March 1999 with Sen. Bob Graham of Florida. Grassley said the change would "help school districts leverage private investment to improve their local schools."
The Senate also approved the Grassley/Graham proposal to raise from $10 million to $25 million the volume of school construction bonds that a small school district could issue each year and still qualify for the small-issuer arbitrage rebate exemption. This provision would expand the benefits of the small-issuer rebate exemption to a broader universe of small school bond issuers. Grassley said it could "make a big difference for districts that are trying to come up with the necessary capital for additional construction or rehabilitation."
Finally, Grassley won approval of his legislation to give expanded tax relief to those repaying student loans for college. His measure would eliminate the current restriction which allows a tax deduction for student loan interest for just 60 months, or five years. Grassley wants to let taxpayers take the deduction for the life of the loan.