INDIAN TRIBES that would like to issue tax- exempt bonds to finance projects on reservations got help from a government report in September.

Tribes can issue tax-exempt debt, but only for projects that perform an “essential governmental function.”The IRS proposed a narrow definition of what qualifies in August. It would limit eligibility to the kinds of projects that “numerous” state and local governments with general taxing powers have been using tax-exempt bonds to finance. The IRS also said it would not allow tribes to use tax-exempt debt to finance commercial or industrial activities.

The Government Accountability Office said in a report to Senator Max Baucus (D.-Montana) that state and local governments have used tax-exempt bonds historically for a wide range of projects. For example, such bonds have been used in 29 states to finance golf courses.

Baucus is pushing legislation in Congress that would make it easier for tribes to use such bonds. He will become chairman of the Senate tax-writing committee in January.

Keith Martin