WASHINGTON – The U.S. Conference of Mayors plans to be aggressive about making sure the tax exemption for municipal bonds is protected, the group’s president told reporters and others here on Wednesday.
After a speech at the National Press Club that addressed what municipalities need from presidential candidates, Baltimore Mayor Stephanie Rawlings-Blake said proposals to limit or eliminate the municipal bond tax exemption frustrate her. The U.S. Conference of Mayors has a group that is focused on maintaining the muni exemption, she said.
“I don’t know who’s telling anybody that we should be balancing the budget on the backs of American cities, who’s telling anybody that it makes sense to restrict the capacity of cities to make significant investments,” she said. “It just doesn’t make sense.”
Already, some presidential candidates have released tax reform or other proposals that have caught the attention of muni market participants.
Former Secretary of State Hillary Clinton, a Democrat, would offset a proposal to reduce student debt by limiting tax expenditures for the wealthy. Businessman Donald Trump, a Republican, would reduce or eliminate deductions and loopholes for the rich in his tax reform proposal. While neither plan specifically mentions munis, it is possible or even likely that the tax expenditures to be curbed would include the muni exemption.
The U.S. Conference is Mayors plans to publish a document, called the “Compact for a Better America: A 2016 Call to Action,” that will outline its priorities for presidential candidates and Congress. The group has yet to finalize the wording of the document, but Rawlings-Blake said the mayors’ priorities will include investing in transportation and water infrastructure.
Rawlings-Blake said the Republican-controlled Congress is not being patriotic when it holds up funding for infrastructure projects. “Republican roads are crumbling just like Democratic roads,” she said. The Baltimore mayor added that infrastructure jobs could bring people out of poverty.
The mayors’ group hopes that the presidential candidates will engage in a “substantive conversation” that recognizes the issues affecting cities and “speaks to real solutions,” Rawlings-Blake said. The group wants the candidates to “fully understand that cities are the engines of our national economy and are at the center of every major issue that we currently face in public life,” she added.
The partnership between cities and the federal government is being threatened by dysfunction in Washington that should not be allowed to continue by members of Congress or presidential candidates, Rawlings-Blake said. “Gridlock strangles Washington, and the consequences of that gridlock, they’re passed onto cities,” she said.
