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hiffiffA r ir 0
<br /> iffirliffig Position Statement
<br /> Preserve and Protect Tax-Exempt Financing
<br /> Tax-exempt municipal bonds are critical financing tools 4'
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<br /> for all public power utilities, which are entities of state ��"
<br /> and local governments. These bonds help build utility �`
<br /> and community infrastructure;indeed, nearly three- "te
<br /> quarters of the infrastructure built in the U.S., including -t t
<br /> roads,bridges, schools,hospitals,water and wastewater .a;. = / � �,,, /,:�'
<br /> treatment plants, and publicly-owned electric utility r q' �"`k
<br /> facilities are financed with muni bonds. These bonds are - .- &l
<br /> desirable to investors because the earned interest is not ff7/ !''. X4 -----' r' r` ,n
<br /> subject to federal income tax. (cs �, _ ,..,,
<br /> The federal tax exemption on municipal bond interest '� '� r'
<br /> has been in place since enactment of the very first . •. . i r" ►
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<br /> federal tax code in 1913. It has allowed state and local ['.rs 1 q..-r. ' �.• +�AIII
<br /> governments to save,on average, an estimated two ' r. 1,,.......... _ .,. j
<br /> percentage points on their borrowing,which translates ,tip ' ' - :,.;
<br /> into a 25 percent savings in public infrastructure costs ' - r ""
<br /> over time. Over the past few decades,tax-exempt ' ' i
<br /> financing has generated trillions of dollars of investment !
<br /> in vital public infrastructure, saving state and local Ai -- , 00. ,
<br /> / II governments hundreds of billions of dollars in interest , ` 1 , ii / _ . Ai
<br /> costs. ; '� � , ' ,:,
<br /> ,....
<br /> But muni bonds are under assault from all quarters, 1 a„ , jLL� ° 4,ii
<br /> including recent White House budget proposals that ' r ��._ F ii
<br /> seek to cap the tax value of the exclusion on muni bonds; — { ` .v
<br /> this amounts to a surtax on the interest of those bonds =- `— :, -
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<br /> and would increase borrowing costs by 32 to 35 percent. - - - -
<br /> Further,this proposal would apply retroactively to$3.7 ;., _ -- =
<br /> trillion of existing bonds, imposing a significant financial Nearly three-quarters of the infrastructure built In the U.S. is
<br /> burden on public power communities. financed with municipal bonds.
<br /> Proposals to tax municipal bonds would impose higher
<br /> borrowing costs on cities and other local governments and higher rates for municipal services such as electric,
<br /> and discourage investment in critical infrastructure. water, and wastewater service.
<br /> Increased borrowing costs would lead to higher taxes
<br /> It seems ironic that in this era of ever more costly
<br /> environmental regulations, Congress and the White
<br /> House are looking to limit the one tool that local
<br /> governments have to control costs as they make
<br /> - (! the investments necessary to comply with one new
<br /> ri 1)--,,, J,_ =- ' ,j 1 I regulation after another.
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<br /> ! Y_ ' ...... MMUA Position
<br /> 1"' -- We urge Congress to preserve the traditional tax
<br /> exempt financing tools used by local governments since
<br /> the development of the federal tax code more than a
<br /> hundred years ago, and to reject all proposals that would
<br /> '"` limit or eliminate the tax exempt status for municipal
<br /> Tax-exempt bonds were a vital financing vehicle for the U.S. bonds,including replacing muni bonds with tax credits
<br /> Highway 10 reconstruction project through Staples,including or"direct payment bonds."
<br /> the overpass visible in the background.
<br /> 2015 Federal Position Statements/7
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