The House has approved an extension of the popular “Build America” Bonds program but with a cut in the federal subsidy. The extension, which would carry the bonds program until April 2013, is part of a broader small-business and infrastructure measure the House passed on March 24. There has been no action yet in the Senate on the legislation.

The bonds program was established under the 2009 American Recovery and Reinvestment Act and is due to expire on Dec. 31. The bonds fund state and local infrastructure work. Since the program was launched in April 2009, the bonds’ volume has climbed rapidly, to $78 billion, or about 20% of the municipal-bond market, as of Feb. 28, the Treasury Dept. says.

Localities issuing the bonds receive a federal subsidy that now equals 35% of the interest rate they pay.

Under the House-approved bill, that subsidy would be cut to 33% in 2011, 31% in 2012 and 30% from January through March 31, 2013.

The Obama administration has proposed to make Build America Bonds permanent, but with the subsidy sliced to 28%.

The Hiring Incentives to Restore Employment Act, signed into law March 18, expands the bonds’ uses to include school construction and energy projects.