In March, AMWA signed two letters to lawmakers that called on Congress to preserve tax-exempt municipal bond interest in the federal tax code.
The first letter was organized by Municipal Bonds for America, a non-partisan coalition of municipal bond issuers and state and local government officials. The letter argues that preserving the current law status of municipal bonds is essential to rebuilding the nation’s infrastructure, and that reducing or eliminating the exemption could raise infrastructure costs by 10 to 12 percent – costs that would be passed on to local taxpayers. AMWA was one of 375 national, state and local organizations to put its name on the letter.
Later in the month, on March 29, AMWA signed a similar letter organized by the Don’t Mess With Our Bonds Coalition, a group of stakeholders led by the U.S. Conference of Mayors. That letter noted that communities issued a record $445 billion worth of municipal bonds in 2016, and that the bonds’ tax-exempt status saved communities billions of dollars in interest expenses they would otherwise have incurred.
AMWA and the National Association of Clean Water Agencies recently released an analysis of the value of tax-exempt municipal bonds to the nation’s water and wastewater systems. The analysis found that eliminating the tax exemption could increase water and wastewater infrastructure financing costs by 25 percent.
Congressional leaders are currently discussing federal tax reform proposals they hope will lower overall rates – though those rate reductions could be offset by scaling back individual deductions and exemptions, such as municipal bond interest. The Trump Administration has indicated it hopes to enact a tax reform package by August, though others have suggested that timeframe could be overly ambitious.