AMWA was one of more than 50 organizations to sign a letter on July 24 urging Senate leaders to maintain the tax-exempt status of municipal bonds when detailed tax reform discussions begin on Capitol Hill later this year.
The letter, which was organized by the U.S. Conference of Mayors’ “Don’t Mess With Our Bonds” coalition, notes that tax-exempt bonds “are the primary financing tool … used by over 50,000 state and local governments” to finance water systems and a range of other infrastructure needs. Without the exemption, the letter explained, state and local governments would have paid an additional $173 billion in interest costs over the past 10 years.
Similarly, a “Dear Colleague” letter in support of the tax exemption attracted the signatures of 138 lawmakers before Reps. Dutch Ruppersberger (D-Md.) and Randy Hultgren (R-Ill.) sent it to House of Representatives leaders on June 28. This letter asked House leaders to reject any proposal to cap or eliminate the municipal bond tax exemption – including President Obama’s FY14 budget proposal to limit the value of tax exemptions on municipal bond interest.
Also in July AMWA and the National Association of Clean Water Agencies (NACWA) released a white paper estimating the specific cost implications to water and wastewater systems of limiting or abolishing tax-exempt municipal bonds. The report, The Impacts of Altering Tax Exempt Municipal Bond Financing on Public Drinking Water and Wastewater Systems, offers detailed examples of water and sewer issues from AMWA and NACWA members and applies three proposed changes to municipal bonds policy to estimate the increased debt service cost that would have to be absorbed by the issuers’ ratepayers. The analyses found that financing costs would increase for every surveyed utility under each of the proposed reform scenarios.
The white paper will be used to advocate on Capitol Hill in favor of preserving municipal bonds in their current form. Individual AMWA members are encouraged to share the paper with their senators and representatives, and utility staff may contact AMWA’s Dan Hartnett ([email protected]) for a copy of a sample letter to introduce lawmakers to the report.