WASHINGTON -- Lobbying to restore tax-exempt advance refundings is ramping up on Capitol Hill after the Public Finance Network sent a letter to lawmakers asking them to cosponsor a bill authored by Rep. Randy Hultgren, R-Ill.
Hultgren offered the bill to reinstate advance refundings after tax law changes enacted in December prohibited them from being done beginning in 2018. He has not had any new cosponsors to H.R. 5003 since the tenth lawmaker joined on April 11, but he issued a statement Wednesday expressing optimism that more will join him.
“We have been encouraged by the steady stream of support among our colleagues to reinstate advance refunding bonds,” Hultgren said. “As we continue to educate members on the importance of municipal finance to their districts, I expect many more will support our efforts.”
Local officials from Virginia and Ohio visited the offices of their respective senators Wednesday seeking one or more of them to sponsor a Senate version of Hultgren’s advance refunding bill.
Terry Stone, president-elect of the Government Finance Officers Association and assistant superintendent for business and operations for Hanover County Public Schools in Virginia, visited the offices of Sens. Tim Kaine and Mark Warner, both Virginia Democrats.
Jamie Nicholson, a member of GFOA’s executive board and finance director for the city of Pataskala Ohio, visited the offices of his state’s senators, Republican Rob Portman and Democrat Sherrod Brown.
National League of Cities spokesman Brian Egan said some members of his organization also are on the Hill “pushing all things infrastructure, including how important advance refunding bonds are to the nation’s cities and seeking additional cosponsors for Congressman Hultgren’s bill.”
Jack Peterson, associate legislative director of the National Association of Counties, said his organization is "fully engaged with our partners in D.C. asking House members to cosponsor the legislation and seeking primary sponsors in the Senate."
Wednesday represented initial steps in what local, county and state officials say they expect will be the vanguard of a much larger contingent of elected officials who will jawbone their federal counterparts in the coming weeks with testimonials about the cost savings attributable to advance refundings.
GFOA estimates municipalities saved almost $12 billion through advance refundings from 2012 through 2016.
The New York Metropolitan Transportation Authority reported in January that it achieved a present value savings of $534.3 million from the $5.26 billion refunding bonds it issued in 2017. Most of those bonds -- $5.38 billion – were advance refundings.
Patrick McCoy, director of finance for the New York MTA and past president GFOA, described the termination of advance refundings under the Tax Cuts and Jobs Act as “shortsighted, misguided.”
McCoy spoke at a forum held Wednesday in Washington that was cosponsored by GFOA, the NLC and the National Association of Counties to discuss the value of tax-exempt municipal bonds.
“Tax-exempt munis are a saving grace,” said Roy Charles Brooks, NACo President and commissioner of Tarrant County, Texas.
Brooks said his county is among the 25 fastest growing in the nation and that tax-exempt municipal bonds are a key tool in helping its infrastructure keep up with that growth.
Nicholson, whose city has a population of 17,000 people compared to the almost two million in Tarrant County, said the he deals with “really the same issues scaled down.”
There is no property tax and local government depends on a voter-approved local income tax to pay for municipal government, Nicholson said.
Because voters in Pataskala eventually approved a local income tax, Nicholson said his city now has an income stream to finance bond issues for infrastructure.