Maryland Congressman Dutch Ruppersberger continues to lead the important fight to protect tax-exempt municipal bonds from federal tax reform, in partnership with Rep. Randy Hultgren, a Republican representing Illinois’ 14th Congressional District. Governing published their joint piece today making the case that capping or eliminating the bonds’ tax deductibility would cause a serious blow to valuable efforts to improve infrastructure.
From their co-authored piece in Governing:
Buildings, roads and bridges: These are the Legos that, when snapped together, create the communities we all call home. President Donald Trump has promised to make improving our infrastructure a centerpiece of his administration, and we are eager to work with him to promote infrastructure investment, job growth and community prosperity. This includes defending a key financing tool that for the past several years has faced growing uncertainty.
For more than a century, tax-exempt municipal bonds have been the single most important means for financing new roads, bridges, schools and hospitals. These are a lifeline without which state and local municipalities would find it far more expensive to finance capital improvements and other infrastructure that benefit everyone.
In Maryland’s Baltimore County, for example, municipal bonds have financed capital projects ranging from the restoration of a library after a fire to the expansion of several public parks. In Illinois’ Will County, the future of a new courthouse and law-enforcement complex hinges on the bonds’ tax-exempt status. Nationwide, the National League of Cities estimates that municipal bonds have financed more than four million miles of roads, 500,000 bridges, 16,000 airports and 900,000 miles of water pipes. In all, municipal bonds support more than 1.5 million civic projects.
But in recent years this bipartisan tool has been under attack, with proposals being floated in Washington to cap the bonds’ tax deductibility or eliminate it entirely. Then-President Barack Obama’s fiscal 2017 budget proposal would have capped the tax deduction at 28 percent. We believe this would devastate municipalities that rely on the tax exemption, especially amid uncertain state budgeting. Reducing the tax benefits of these bonds would be bad for jobs and for taxpayers; higher project costs would shift to taxpayers through increased property taxes, fees and other means.
The fact-laden editorial calls attention to the trillions of dollars necessary for state and local governments to meet their infrastructure needs.
Reps. Ruppersberger and Hultgren sent a letter to House leadership urging rejection of any proposal to water down benefits for tax-exempt municipal bonds – and more than 150 of their colleagues joined them. MACo joined NACo in advocating in support of the letter. In addition, they call attention to their launch of the Municipal Finance Caucus:
We have also launched the bipartisan Municipal Finance Caucus to continue promoting the importance of this tax exemption with our colleagues in Congress. The caucus is a valuable platform that ensures any discussion of comprehensive tax reform includes the needs of municipalities throughout this nation. Answering the call for reliable, proven infrastructure financing means we must protect this vital tool for job growth and economic development in our communities.
Helpful Links
“The Growing Threat to Municipal Bonds” by Randy Hultgren, Dutch Ruppersberger in Governing
Municipal Bond Dear Colleague Letter
NACo Action Alert On Municipal Bonds
Prior Conduit Street coverage:
Ruppersberger Starts Municipal Finance Caucus
Ruppersberger Again Leading Defense of Muni Bonds
Ruppersberger Leads Bipartisan Effort to Protect Critical Infrastructure Financing Tool
Ruppersberger Takes Lead on Municipal Bonds Issue
Ruppersberger: Protect Municipal Bonds
MACo Joins NACo: Defend Municipal Bonds
President’s Budget Proposal Caps Municipal Bond Tax Exemption
