Municipal Bonds
Adopted at the in 2021
WHEREAS, tax-exempt municipal bonds provide access to affordable capital that finances infrastructure that touches the daily lives of every American and are the foundation of civilized society, including roads, transit, schools, affordable housing, water and wastewater, hospitals, airports, and electricity; and
WHEREAS, 75 percent of all infrastructure investments made in the United States are financed by state and local governments and their agencies, with many of these investments made with tax-exempt municipal bonds; and
WHEREAS, tax-exempt municipal bonds have, for over 100 years, been the primary financing tool state and local governments use to access capital markets to meet the infrastructure needs of their citizens; and
WHEREAS, interest on municipal bonds is exempt from Federal taxation under a principle of reciprocal immunity under which the Federal Government is exempt from State and local taxation and local governments are exempt from Federal taxation; and
WHEREAS, savings from affordable financing through tax-exempt bonds allows for greater infrastructure investments and savings passed directly to taxpayers and ratepayers in the form of reduced taxes and fees; and
WHEREAS, keeping infrastructure costs low is critical to job creation and to the infrastructure investments that are the backbone of our economy; and
WHEREAS, federal mandates significantly increase state and local government infrastructure costs, with mandates related to the Clean Water Act placing an especially large burden on city governments; and
WHEREAS, the federal tax code outlines rules for a special category of bonds (often called "private activity bonds") that permit a greater degree of private sector involvement in projects and programs that provide important public benefits, including housing, transportation, economic development, higher education facilities and financing, with the majority issued for housing (affordable multi-family housing and mortgage revenue bonds); and
WHEREAS, the Tax Cut and Jobs Act (PL 115-97) maintained the tax exemption for municipal bonds, including private activity bond; and
WHEREAS, the Tax Cut and Jobs Act repealed the tax exemption for the advanced refunding of municipal bonds, effective December 31, 2017; and
WHEREAS, prior to the enactment of the Tax Cut and Jobs Act, the tax code allowed a tax exemption for one advanced refunding of municipal bonds; and
WHEREAS, prior to the enactment of the Tax Cut and Jobs Act, the tax exemption for advanced refunding bonds saved state and local governments and their taxpayers and ratepayers billions of dollars and helped stretch valuable state and local infrastructure dollars; and
WHEREAS, the loss of the tax exemption for advanced refunding will increase the cost of financing infrastructure investment for state and local governments; and
WHEREAS, Senators Roger Wicker (R-MS) and Debbie Stabenow (D-MI) have introduced bipartisan legislation (S 479), the Lifting Our Communities through Advance Liquidity for Infrastructure Act (LOCAL Act), which would reinstate the tax exemption for advance refunding bonds, and which has garnered 22 bipartisan cosponsors; and
WHEREAS, Representatives Dutch Ruppersberger (D-MD) and Steve Stivers (R-OH) have introduced bipartisan legislation (HR 2288), the Investing in Our Communities Act, which would reinstate the tax exemption for advance refunding bonds, and which has garnered 30 bipartisan cosponsors; and
WHEREAS, Representatives Dutch Ruppersberger (D-MD) and Steve Stivers (R-OH) Chair the bipartisan Municipal Finance Caucus to advocate for state and local governments' ability to independently finance infrastructure projects and keep their communities strong, including preserving that tax exemption for municipal bonds,
NOW, THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors affirms its opposition to any proposal to cap, limit, eliminate or replace tax-exempt bonds, including private activity bonds; and
BE IT FURTHER RESOLVED, that The United States Conference of Mayors supports legislation to reinstate the tax exemption for advanced refunding bonds, including HR 2288; and
BE IT FURTHER RESOLVED, that The United States Conference of Mayors thanks Representatives Ruppersberger and Stivers for introducing HR 2288 and for their leadership on municipal finance issues; and
BE IT FURTHER RESOLVED, that The United States Conference of Mayors urges all House members to join the Municipal Finance Caucus.