Senate and House budget bills that don't exactly align are getting kicked into a conference debate where two committees attempt to reconcile the differences, leaving muni advocates on guard.
"They meet in a closed-door room," said Emily Brock, director of the federal liaison center of the Government Finance Officers Association.
"It's not a very public process, and the potential for another pay-for can crop up inside those doors whether it's tax-exempt municipal bonds or something else. So, vigilance is still important."
The comments came during a meeting of the Debt Committee of the GFOA on Saturday.
The possibility of eliminating tax exempt municipal bonds to boost federal revenues was unveiled in
The budget reconciliation process begins with the House passing its version first. The Senate then passes its version which includes a
Any remaining discrepancies between the two bills are settled by each house of Congress selecting a conference committee to resolve the differences. Both chambers then vote to approve the final version.
If either chamber rejects the reconciled version, further negotiations or amendments may be needed, which could bulldoze the administration's self-imposed deadline.
"That Fourth of July date is definitely not happening unless they force people to work through the holiday," said Jarron Brady, policy analyst of GFOA's Federal Liaison Center.
The discussion over the cap on state and local tax deductions appears to be solved by the Senate's proposed compromise of leaving the House's new deduction limit of $40,000 in place but only until 2029 when it would revert to its current limit of $10,000.
The GFOA is anticipating further negotiations as the bill bounces towards the president's desk and looking for openings to reverse losses that happened in the last major tax legislation under a Trump presidency.
"I think we're in a really good position, because of the offense we played," said Brady.
"It'll be a more interesting discussion, to see where we can get on advanced refunding, which has a bunch of co-sponsors, both on the Republican and the Democratic side, and the small issuer exception, which does not have a bill currently on the Senate side."
The advance refunding of municipal bonds was sacrificed in 2017 during the conferencing stage of the budget reconciliation that created the Tax Cuts and Jobs Act, which also spawned the cap on state and local tax deductions.
Rep. Terri Sewell D-Ala., and other lawmakers have been
Her proposed legislation is looking to reset the cap at $30 million as opposed to its current limit of $10 million, the number that's been used since 1986.
The reconciliation process can only be used once in a budget cycle, but it could come back next year in the same Congress, which could renew the battle.
"Everyone thought for sure they were on the chopping block," said Brock.
"We don't want to play defense and we're fortifying that with the Public Finance Network. "We're trying to make it something that is permanent and understandable, and if any new member comes into Congress, we're going to go call them and make sure they understand what municipal bonds are."
