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RESOLUTION No. 13-1 <br /> BOARD OF COMMISSIONERS <br /> ELK RIVER MUNICIPAL UTILITIES <br /> A RESOLUTION OF BOARD OF COMMISSIONERS OF ELK RIVER <br /> MUNICIPAL UTILITIES IN SUPPORT OF THE PRESERVATION OF TAX <br /> EXEMPT FINANCING <br /> WHEREAS, municipal bonds are the means by which local governments finance the <br /> critical infrastructure of the nation, including roads, bridges, hospitals, schools, <br /> wastewater facilities, water systems and electric and gas utility systems; and <br /> WHEREAS, under current law the owners of municipal bonds are not required to pay <br /> federal income tax on the interest income they receive from the bonds; and <br /> Whereas, exempting municipal bond interest results in lower capital costs to local <br /> governments, which is key in enabling them to make timely investments in critical <br /> infrastructure; and <br /> WHEREAS, municipal bonds are a sound, time-tested financing tool that provide a <br /> natural test of project viability, as issuers must convince investors to purchase the bonds <br /> for feasible projects that will realize a return on investment ; and <br /> WHEREAS, this tax exemption is part of a more than a century-long system of reciprocal <br /> immunity under which owners of federal bonds are not required to pay state and local <br /> income tax on the interest they receive from those bonds; and <br /> WHEREAS, the precept that one level of government should not tax another was set out <br /> by this nation's founders and has been embodied in statute since enactment of the first <br /> federal income Tax Code in 1913; and <br /> WHEREAS, Congress and the President are considering proposals to eliminate or alter <br /> the federal tax exemption of interest on municipal bonds; and <br /> WHEREAS, the capital cost of building new municipal infrastructure has increased <br /> greatly since the last major revision to the federal income Tax Code in 1986. One of the <br /> major drivers in the increased capital costs is the cost of compliance with a broad matrix <br /> of increasingly stringent federal regulations; and <br /> WHEREAS, in prior years cities could often obtain grants to cover as much as ninety <br /> percent of the capital cost of developing new infrastructure such as water and wastewater <br /> treatment facilities; and <br />