Washington, D.C. — U.S. Rep. Bob Etheridge (D-Lillington) today introduced legislation to provide for $25 billion for school construction bonds.
Etheridge introduced the bill at a press conference in the U.S. Capitol with House Ways and Means Chairman Charlie Rangel (D-NY) and Rep. Jim Ramstad (R-MN), the other two primary sponsors of the bill.
“As the only former state schools chief serving in Congress, I know firsthand how important quality facilities are to successful schools. In North Carolina our schools are bursting at the seams, and overcrowding impedes the academic mission of our schools,” said Etheridge.
“This bill will put the federal government to work in partnership with states and local education agencies to build new schools, reduce overcrowding, lower class sizes, enhance good order and discipline in the classroom and improve the learning environment.”
H.R. 2470, The America’s Better Classrooms (ABCs) Act of 2007 will provide a federal tax credit to bond holders to pay the interest on local school bonds. The state or school district would only be responsible for repaying the principal. The bill will provide federal support in partnership with local officials to leverage about $25 billion in bonds for school construction, which could provide millions in interest-free school construction bonds for new schools in North Carolina. Etheridge announced plans for the legislation in April at Aversboro Elementary School in Garner.
The legislation will be deficit-neutral and will not result in new taxes or more borrowing from foreign countries. It will meet all pay-as-you-go requirements passed by the U.S. House of Representatives in January.
Etheridge introduced similar legislation in his first term in Congress a decade ago, and with the support of Chairman Rangel, the bill is poised for action. At the request of Etheridge, the budget resolution Congress passed for Fiscal Year 2008 includes a provision that paves the way to approve legislation for tax credits for school construction bonds.
The bipartisan plan announced today would subsidize $25 billion in zero-interest school modernization bonds. The federal government would provide tax credits for the interest normally paid on a bond. Funds that local and state government entities would have used to pay bond interest would be freed for other education needs.
For each $1,000 of school bonds, states or local school districts would save as much as $500 in total payments. The bill would provide $25 billion over the next two fiscal years for zero interest school modernization bonds. It also includes $2.4 billion for schools located in Empowerment Zones, Enterprise Communities or communities in which 35 percent of their students are eligible for free or reduced price school lunches as part of the Qualified Zone Academy Bond (QZAB) initiative.
The bill would allocate 60 percent of the $25 billion in school modernization bonds to states based on school-age population. The remaining 40 percent would be directly allocated to the 125 school districts with the largest number of low-income students.