WASHINGTON – More than 50 state, local and industry groups sent letters to Capitol Hill urging House leaders and tax-writers to maintain the tax-exempt status of municipal bonds.
"The municipal bond tax exemption has a long history of success, having been maintained through two world wars and the Great Depression, as well as the recent Great Recession, and it continues to finance the majority of our nation's infrastructure needs for state and local governments of all sizes," said the groups, which include the U.S. Conference of Mayors, Government Finance Officers Association and the American Society of Civil Engineers. "We cannot afford to abandon the great success of this important financing tool."
Meanwhile, seven state and local groups wrote House Ways and Means Committee leaders urging them to preserve the tax exemption for municipal bonds as well as state and local tax deductibility.
"We do not believe it is the intent of Congress to undermine the ability of states and local governments to meet the needs of the citizens we all serve through comprehensive tax reform," said the groups, which included the National League of Cities, the National Governors Association and the USCM. "We urge lawmakers to carefully consider any changes to the tax-exempt status of municipal bonds and the deductibility of state and local taxes, as both are essential tools for states and local governments across the country."
The "Don't Mess With Our Bonds Coalition Letter" signed by the more than 50 groups has been in draft form collecting signatures since February before it was sent to Capitol Hill on Wednesday.
"In 2016 alone, the volume of municipal reached $4445 billion, which surpassed the previous high set in 2010 of $433 billion," the groups told the lawmakers. "Between 2007 and 2016, state and local governments invested $3.8 trillion in infrastructure through tax-exempt municipal bonds."
"Proposals to reduce or repeal the tax exemption would have a severely detrimental impact on national infrastructure development and the municipal bond market. Such proposals would clearly increase the borrowing costs of state and local governments and create uncertainty for investors," the groups continued, adding, "For example, between 2000 and 2014 the federal exemption saved state and local governments an estimated $714 billion in additional interest expenses. In 2015 alone, the federal exemption saved state and local governments an estimated $8 billion in additional interest expenses."
That letter was also signed by the Associated General Contractors of America, the Concrete Pavement Association, the Investment Company Institute, the American Hospital Association and the Water Infrastructure Network, among many others.
The rest of the big seven state and local groups are the National Association of Counties, the International Municipal Lawyers Association, the National Council of State Legislatures and the Council of State Governments.
