MACo’s President, Wicomico County Executive Rick Pollitt, sent a letter today to Maryland’s congressional urging them to support tax-exempt municipal bonds. The tax exemption on municipal bonds, which has been in place since the inception of the tax code itself, has been threatened in Congress’s negotiations to reduce the federal deficit and revise the tax code this year. The National Association of Counties (NACo) and other state associations of counties have voiced their concern over this issue.
The tax-exemption on municipal bonds is key to counties’ ability to make infrastructure investments. As described,
Tax-exempt municipal bonds are the most important tool in the United States for financing state and local infrastructure. State and local governments financed more than $1.65 trillion of infrastructure investment over the last decade through the tax-exempt bond market. Municipal bond financing supports schools, hospitals, water, sewer facilities, public power utilities, roads and mass transit. In Maryland, the State and local governments used $19.2 billion in municipal bonds for infrastructure investment over the past ten years.
Without a tax exemption for municipal bonds, Maryland’s state and local governments would face greatly increased costs for these essential investments. NACo’s estimate is some $5.8 billion in additional interest costs from the last decade alone. These shifted costs to counties would fall primarily upon their main general revenue source — the property tax. This would further burden an already struggling real estate market, and impose among the most regressive and unpopular tax schemes onto taxpayers.
For further reading, see the full text of MACo’s Letter to the congressional delegation and additional information and web resources from NACo.
State Treasurer Nancy Kopp also emphasized the importance of the municipal bond exemption during her March 27 visit with the MACo Legislative Committee. See previous coverage on Conduit Street.