U.S. Transportation Secretary Ray LaHood told municipal leaders meeting in Washington Friday that he would help protect the tax-exempt status of municipal bonds but also urged them to take advantage of federal loan and grant programs to strengthen their local infrastructure investment.

Speaking on a transportation panel at the annual winter meeting of the U.S. Conference of Mayors, LaHood heard a passionate plea on behalf of tax-exempt financing from Laredo, Tex. Mayor Raul Salinas. Mayors at the conference have expressed alarm at the prospect that munis could either lose their tax exempt status or have a cap placed on the amount of interest that would be tax free, potentially driving up borrowing costs and harming infrastructure investment.

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