February 21, 1984 EXTENSIONS OF REMARKS 2795 EXTENSIONS OF REMARKS MEMBERS OF SMALL BUSINESS vital SBA program was inadvertently ed this SBA program from fulfilling its COMMITTEE APPEAL TO . SAVE left out of the bill. mandate. By denying the use of Federal loan guarantees in conjunction with tax­ VITAL PROGRAM Mr. Speaker, we hope this action by exempt bonds, hundreds of small firms the Small Business Committee will would be forced to finance their Govern­ help bring this unfortunate oversight ment-mandated pollution control expendi­ HON. BERKLEY BEDELL to the attention of the Ways and tures at a much higher cost than their big Means Committee, and we hope we business competitors. OF IOWA can work together to save this pro­ Although we share your concern about IN THE HOUSE OF REPRESENTATIVES gram. I think we can all agree that it our nation's serious deficit problem, we are is not the intention of the Ways and sure you will agree that it is not the kind of Tuesday, February 21, 1984 Means Committee to strip away rights program you want your Committee to abol­ Mr. BEDELL. Mr. Speaker, last from small business and put them at a ish. Thus, we strongly recommend that your e Committee exempt this SBA program from week 38 members of the Small Busi­ competitive disadvantage their big any restrictions on the issuance of tax­ ness Committee took an unusual step business counterparts. exempt bonds. by sending a letter to the Ways and At this point, I would like to include Sincerely, Means Committee in an effort to save in the RECORD the letter that the 38 a vital small business program. Parren J. Mitchell, Berkley Bedell, Neal members of the Small Business Com­ Smith, Joseph P. Addabbo, Henry B. The Small Business Administration's mittee sent to the Ways and Means Gonzalez, John J. LaFalce, Joseph M. pollution control loan program was set Committee, and an outline discusses McDade, Silvio 0. Conte, William S. up to help small businesses obtain the history and importance of the pro­ Broomfield, Lyle Williams, Win long-term reasonable rate financing gram. Weber, Henry J. Nowak, Andy Ireland, for their Government-mandated pollu­ Nicholas Mavroules, Ike Skelton, HOUSE OF REPRESENTATIVES, Dennis E. Eckart, Thomas A. Luken, tion control expenditures. The SBA COMMITTEE ON SMALL BUSINESSS, has used their authority under the Gus Savage, Ron Wyden, Buddy Washington, D. C., February 7, 1984. Roemer, Norman Sisisky, Dan Schae­ program to guarantee tax-exempt fer, David Dreier, Guy V. Molinari, bond issues that are used by small Hon. DAN ROSTENKOWSKI, Chainnan, Ways and Means Committee. Christopher H. Smith, Michael Bili­ businesses to finance the cost of their rakis, Gene Chappie, Sherwood L. pollution control equipment. Investors DEAR MR. CHAIRMAN: As members of the Boehlert, Hal Daub, Toby Roth, Esta­ are offered Government-guaranteed, Small Business Committee, we wish to make ban Edward Torres, Tom J. Vander­ tax-free bonds, while small companies you aware of a program that is of great im­ griff, Robin C. Britt, Charles Hatcher, are able to obtain long-term, low-rate portance to the small business community. Charles A. Hayes, Richard Ray, financing for these nonrevenue pro­ The Small Business Ad.ministration's pollu­ Charles W. Stenholm, and James R. tion control loan program was designed to Olin. ducing assets. help small firms obtain long-term reasona­ By all measures the program has ble rate financing for Government-mandat­ FACTS A.BOUT THE SBA's POLLUTION CONTROL been a success. It even generates reve­ ed pollution control expenditures. LoAN PROGRAM nue for the Federal Treasury from the By all measures, the program has been a management fees collected from the success. It even generates revenues for the PURPOSE OF THE PROGRAM participating small businesses. The Federal Treasury from the management The Small Business Ad.ministration's pol­ management fee is supposed to cover fees collected from the participating small lution control loan program was established SBA's losses from the program, but businesses. The management fee is supposed to help small businesses obtain long-term, the default rate has been so low that to cover SBA's losses from the program, but reasonable rate financing for government­ SBA's losses have been covered by the the default rate has been so slow that SBA's mandated pollution control expenditures. losses have been covered by the interest The SBA was given the authority to guaran­ interest earned on the loan reserve earned on the loan reserve pool. tee tax-exempt bond issues that small busi­ As pool. of June 30, 1983, there was a Most importantly, however, this SBA pro­ nesses used to finance pollution control ex­ balance of $38.5 million in the loan re­ gram allows small businesses to obtain pol­ penditures. No substitute for the SBA pro­ serve pool-$23. 7 million was income lution control financing on the ~ame basis gram exists. generated from fees and $5.6 million that big businesses obtain it. This is vital, was the interest income. since this type of expenditure is non-reve­ THE PROGRAM WORKS The most important thing about this nue producing, and generally not available This program, when it has been able to SBA program is that it allows small from conventional sources. function as Congress intended it to func­ business the same benefits as big busi­ Big businesses have sufficient credit to tion, met the objective of helping small ness. Of course, big business does not offer tax-exempt pollution control bonds to business finance the costs of complying with the public. Small firms do not. Because of environmental protection laws. need Federal guarantees to issue tax­ this, together with the relatively small size The program earns the government exempt pollution control bonds. By of their issues, many small firms would not money because of the fees collected from the end of the third quarter of 1983 be able to obtain pollution control financing small business participants. Almost $24 mil­ alone, big business floated approxi­ without the help of SBA's program. lion in fees and over $5.5. million in interest mately $2.3 billion in tax-exempt pol­ Last year, the Small 'Business Committee on those fees has accrued to date. The de­ lution control bonds. By contrast, the reported H.R. 3020, which reauthorized the fault rate is so low that the interest earned SBA program was funded at $250 mil­ pollution control program in the SBA's on the fees is sufficient to cover program lion. fiscal year 1984 and fiscal year 1985 budget. losses. H.R. 3020 also makes it clear that SBA Unfortunately, the IDB provision of cannot discriminate against small firms BIG BUSINESS HAS AN ADVANTAGE OVER SMALL H.R. 4170 contains language that wishing to finance their pollution control BUSINESS, SMALL BUSINESS NEEDS THIS PRO­ would severely cripple this important expenditures on a tax-free basis as big busi­ GRAM FOR EQUALITY small business program. While exemp­ nesses do. The program was designed to give small tions are carved out in the IDB provi­ Unfortunately, H.R. 4170, the revenue businesses the same opportunity that big sions for other Federal programs, such measure reported by the Ways and Means businesses have to finance government-man­ as veterans' and student loans, this Committee last session, would have prevent- dated pollution control abatement facilities. • This "bullet" symbol identifies statements or insertions which are not spoken by the Member on the floor. 31-059 0-87-45 (Pt. 2) 2796 EXTENSIONS OF REMARKS February 21, 1984 Big businesses do not need the guarantee or es presently have in pollution control fi­ THE "OTHER" REFUGEES small issue pooling authority because of nancing.e their access to the capital markets and the size of their bond issue tax-exempt pollution HON. PHILIP M. CRANE control bonds. CONGRESSIONAL TRIBUTE TO OF ILLINOIS Big businesses issued $513 million in tax­ EVELYNNE MARIE MEADE exempt pollution control bonds in the first IN THE HOUSE OF REPRESENTATIVES quarter of 1983. That is twice the amount HON.GLENNM.ANDERSON Tuesday, February 21, 1984 Congress authorized for all small businesses in fiscal year 1983. OF CALIFORNIA e Mr. PHILIP M. CRANE. Mr. Speak­ IN THE HOUSE OF REPRESENTATIVES er, in recent months we have all heard RECENT ACTION ON THE SMALL BUSINESS POLLUTION CONTROL PROGRAM Tuesday, February 21, 1984 a great deal about the plight of the ci­ The Administration has sought for two e Mr. ANDERSON. Mr. Speaker, on vilians of El Salvador. Many of them years to deny small businesses the same February 29, 1984, the faculty club of have been forced to flee their home­ benefits that big businesses have in pollu­ the University of California at Davis, land because of the civil war that has tion control financing. First, the Treasury will be honoring Evelynne Marie raged there for several years now. This issued Revenue Ruling 81-216 to deny small Meade on her retirement after her is indeed a tragic situation, and one businesses the ability to pool their pollution that should not be ignored. control bond issues and receive tax-exempt many years of service to the universi­ ty. This occasion also has special It seems strange to me, however, status. The FY83 continuing resolution that little or nothing is said about the helped to overcome that obstacle. meaning to me because Evelynne Next, the Administration tried to cut the served as my executive secretary while refugees of another country in that loan guarantee authority in SBA's pollution I was Lieutenant Governor of Califor­ same region: Nicaragua. For the most control program.