Municipal bonds are at risk in federal budget reduction discussions as the 119th Congress gets underway. As the Tax Cut and Jobs Act of 2017 provisions expire in 2025 and discussions on the national debt continue, budget reduction proposals to help pay for tax cuts could threaten tax-exempt municipal bonds again.
Talk to your Congressional delegation, especially Rep. Suzan DelBene (D-Dist. 1) who serves on the U.S. House Ways & Means Commitee and Sen. Patty Murray (D–WA) who serves as Vice Chair of the U.S. Senate Appropriations Committee, about the importance of bond projects in your communities. Remind them of projects built in your community with municipal bonds and that the tax-exempt bonds issued by state and local governments and nonprofit entities have financed more than three-quarters of our nation’s infrastructure. If state and local governments cannot use tax-exempt bonds, issuing taxable bonds instead is expected to increase debt costs by at least 25%.
You can also help the National League of Cities (NLC) advocate by contributing examples to NLC and GFOA’s dashboard of projects built by bonds.
Stay tuned as federal budget discussions evolve. NLC is also hearing other budget reduction proposals could include the State and Local Tax (SALT) deduction and tax credits under the Inflation Reduction Act.