Kentucky Treasurer Todd Hollenbach is asking residents of the state to urge their Congressional representatives to save the tax exemption on municipal bond interest.

Hollenbach said he was one of the first state treasurers to sign onto a letter from the National Association of State Treasurers that urged members of the U.S. House Ways and Means Committee to retain tax-exempt bonds.

"It's an issue that will have long-term ramifications for Kentucky's budget and our public infrastructure projects," Hollenbach said in a release appealing for citizens to act.

Ultimately 42 state treasurers signed the NAST letter.

"State and local governments use municipal bonds as the primary means of financing highways, bridges, transit systems, airports, water and wastewater systems, schools, higher education facilities and many other public projects," he said. "The need in our state to upgrade and maintain our bridges and roads has never been greater."

Eliminating or reducing the tax exemption on bonds will result in fewer projects and jobs, and will result in continually deteriorating infrastructure, said Hollenbach.

According to the NAST, tax-exempt bond issuers save an average of 25% to 30% on interest costs compared with taxable bonds.

"With already tightened budgets the ability to save billions of dollars on infrastructure financing is essential," Hollenbach said. "Eliminating the tax exemption will force us to pay higher borrowing costs at best or at worst cause us to curtail or abandon infrastructure projects."

In February, market experts at the National Municipal Bond Summit in Fort Lauderdale urged issuers across the country to engage in a grass-roots effort to save munis from tax reform efforts, which have included potentially revoking the exemption retroactively and placing a cap on the amount of tax exempt interest a taxpayer can claim.

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