Keeping the full tax-exemption for municipal bonds will be vital to America's plans for rebuilding its infrastructure, Scott Pattison, executive director and CEO of the National Governors Association, said on Tuesday.
Addressing a meeting of the Municipal Forum of New York, Pattison said that governors and the states must make sure that officials at the federal level understand the vital role that tax-exemption will play in rebuilding America.
"Tax-exemption not sexy," Pattison said in an interview ahead of his speech, "but it's critical to have all the tools in our toolbox to best fix the infrastructure of our country."
He told the Forum that the governors weren't concerned that the actual municipal bond tax-exemption would be directly threatened, but rather they were concerned that tax-exemption could become "collateral damage from some type of tax reform that caps deductions or somehow limits the amount of interest that you can deduct from certain things, including mortgages."
He added, however, that he didn't believe there would be agreement on major tax reform in Washington.
Pattison said he was hopeful that infrastructure would be addressed in Washington this year as divisiveness over healthcare reform make it look less likely that ACA will be the first issue for Congress and the Trump Administration would tackle.
"Infrastructure investment is absolutely a bi-partisan issue right now," Pattison said, adding that he is very hopeful that situation will continue and that both presidential candidates spoke about the issue. "For the first time ever you had the word 'infrastructure' in an inaugural address."
He said that "we think that from the governors' perspective in the states this is going to be a year that we're going have something on infrastructure."
He added that "we think there will be a variety of tools [for funding and financing] … but there the most important thing that that states and cities and local governments say is 'please don't mess with municipal bonds' in the next Congressional session."
Pattison also said it is best to have as many financing and funding scenarios to choose from when it comes to deciding on what projects to fix.
He said he sees a role for public partnerships, as long it doesn't become "a situation where it becomes robbing Peter to pay Paul."
The NGA sent a list of 428 shovel-ready infrastructure projects in 49 states and territories to the Administration as candidates for the president's $1 trillion infrastructure initiative.
President Trump's proposed plan would involve tax credits and would have to be tied to a tax reform package that could produce enough revenue to finance it.
Senate Democrats have presented their own 10-year, $1 trillion infrastructure package that calls for more direct federal funding, rather than incentives for private investments.
