WASHINGTON – Congress must recognize that municipal bonds are critically important to financing state and local projects and must not do anything to threaten their use, Virginia Gov. Terry McAuliffe said Thursday on behalf of the nation's governors.
"State strategies to create jobs, build infrastructure, and grow economies depend on tools, but public financing – notably tax-exempt financing – remains the primary instrument to raise capital for a wide range of projects and needs," McAuliffe, vice chair of the NGA, said in outlining the governors' priorities for the year.
"As Congress continues to talk about comprehensive tax reform, we remind them that federal policy should neither increase costs to public issuers, nor decrease market demand for municipal bonds," he said in a speech at the National Press Club, adding, "Let's keep the municipal bond interest exclusion."
McAuliffe also urged Congress to pass the Marketplace Fairness Act, warning that if lawmakers do not act, the states will.
The MFA (S. 689), sponsored by Sen. Mike Enzi, R-Wy., and 22 bipartisan colleagues, would level the playing field for retailers by allowing states with simplified sales tax requirements to require out-of-state businesses selling products over the Internet to collect taxes on those sales.
A similar bill, called the Remote Transactions Parity Act (H.R. 2775) and sponsored by Rep. Jason Chaffetz, R-Utah, is pending in the House.
"In Virginia, passing market place fairness legislation would mean $500 million more for transportation and I know states around the country are eager to use those revenues to benefit their residents as well," McAuliffe said.
"Unfortunately, although we are talking about collecting taxes that are already owed, Congress cannot find the political stomach to pass legislation through both houses," he said, adding, "The [NGA] will continue to support the efforts of Senators and Representatives that support fair competition, but will also seek alternative solutions at the state level."
Meanwhile, NGA chair Utah Gov. Gary Herbert, noted in the fourth annual NGA State of the States address, that the group's guiding principles state that federal action should be limited to national situations, should not unnecessarily pre-empt additional state action, and should avoid imposing unfunded federal mandates or shifting federal costs to states."
"Too often, Congress attempts to fix problems with a one-size-fits-all solution, disregarding the regional, cultural, and demographic differences unique to the respective states," he said.
Herbert also suggested less partisan bickering and gridlock, saying, "after the election, let's all join the 'Common Sense Party' and work together to find solutions and improve lives."
