Coalition to Lobby to Add to Trump's Support for Muni Exemption

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WASHINGTON – A coalition of more than 60 municipal-bond related groups will work to add to President-elect Donald Trump's support for maintaining the tax exemption, the U.S. Conference of Mayors said this week.

Steve Benjamin, mayor of Columbia, S.C. and second vice president of USCM, recently told The Bond Buyer that the "Don't Mess With Our Bonds" coalition will work to maintain the muni exemption in Congress as Republicans mull over a plan for tax reform during the coming months.

USCM met with Trump at Trump Tower in New York last month, where the president-elect told group leaders that he supported maintaining the muni exemption to fund national infrastructure.

"We will be the president-elect's army on this one to make sure he gets his way," the group said. "This is the top priority because the threat is that real."

Benjamin said that although the coalition is "potentially" looking at the tax credit idea that Trump has floated in his infrastructure proposal, alternatives such as Build America Bonds can only complement, not replace, the municipal bond.

"I asked him very specifically if he would work to protect munis and I referenced his trillion-dollar infrastructure commitment," Benjamin said. "BABs are complementary but nothing could more efficiently replace the tool already in place."

Though Trump alleviated some concerns, the group said that the exemption remains in "serious" doubt because some members of Congress are pushing for its repeal. The GOP blueprint for tax reform released last June suggests eliminating unnamed deductions, which likely would include the muni exemption, the coalition added.

The coalition includes state and local groups like the National Association of Counties, Government Finance Officers Association, and National Association of State Treasurers, as well as utility organizations like the American Public Power Association and the Association of Metropolitan Water Agencies.

The coalition will implement grassroots efforts, including education and advocacy, to engage directly with members of Congress and their staff. "Don't Mess With Our Bonds" will help citizens articulate tax hike concerns, Benjamin said, as well as the potential withdrawal of a federal commitment to infrastructure spending from any change in the treatment of munis.

"The reality is as Congress takes a strong look at tax reform, we believe there is a clear and present danger to the tax treatment of munis," Benjamin said. "There must be a coordinated and strategic effort to make sure people understand how important this tool is to building and rebuilding America."

Oklahoma City Mayor and USCM President Mick Cornett echoed concerns over the muni exemption surviving a potential year of tax reform.

"If Congress repeals the exemption, it will strangle infrastructure investment causing economic growth to slow to a crawl, the elimination of hundreds of thousands of jobs and the further deterioration of our roads, schools and hospitals," Cornett said. "We will fight any move that threatens our economy and presents a danger to our hard-working taxpayers."

USCM is holding its annual winter meeting this week in Washington.

"We have a large group of mayors of every party and this seems to be the singular issue there's unanimity on," Benjamin said.

In a news release announcing the campaign Tuesday, the group cited several figures they said stress the need to keep tax-exempt bonds as is, including an American Society of Civil Engineers estimate placing the U.S. infrastructure spending need at $3.6 trillion by 2020. The Treasury Department predicts the government will forgo as much as $617 billion in revenue over the next decade by excluding interest on state and local bonds, the coalition added.

State and local groups also pressed for support for the muni exemption in 2013 and 2015 after President Obama floated a potential 28% cap on the bonds.

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