Tax reform

As Republicans hash out their promised tax package, the debate over the bill's scoring method carries implications for tax-exempt municipal bonds.

The tax exemption appears to be in realistic danger as House Republicans seek to offset the cost of extending the Trump tax cuts.

Unfortunately, a vocal minority believes eliminating the longstanding tax exemption on local, state, and municipal bonds is one way to pay for extending tax cuts.

OMB director nominee Russell Vought said he supports allowing the president to redirect funding away from state and local governments, bypassing the congressional appropriations process.

The finally approved continuing resolution steers around the debate to raise the debt ceiling while funding repairs to the toll-supported Key Bridge in Baltimore, reimbursing DC for inauguration costs and transferring the RFK stadium site.

The future of key policies and upcoming budget battle tactics are taking shape based on several leadership changes and announcements in recent days.

Scott Bessent, a hedge fund manager and noted Trump ally, is nominated for Treasury Secretary.

Unless the state government makes changes to taxes or spending, there will be deficits of $587 million to more than $800 million starting in the next fiscal year.

Issuers and development advocates urged lawmakers to include advance refunding, the expansion of opportunity zones, and other muni prorities in any upcoming tax package.

Interest rates and federal elections hang heavy over the industry and municipal analysts believe certain muni sectors or subsectors will experience credit deterioration.