Over 600 State & Local Officials Warn Congress that Proposed Change Would Increase Taxpayer Cost of Financing Schools, Roads & Other Infrastructure
SALT LAKE CITY – March 10, 2016 – Utah State Treasurer David Damschen returned from his first official trip to Washington, D.C. since being sworn in as Utah’s 25th State Treasurer. The trip coincided with the National Association of State Treasurers’ (NAST) 2016 Legislative Conference and submission of a letter – co-signed by Utah Treasurer Damschen and over 600 state and local officials – sent to top lawmakers on tax-law writing committees in the U.S. Congress, including Utah Senator Orrin Hatch. The letter [attached] outlines the group’s adamant opposition to proposed changes to the tax treatment of municipal bonds, noting the current structure is essential for obtaining low-cost investor funding for the building of schools, roads and other infrastructure.
“If Washington politicians eliminate a major incentive for investment in Utah infrastructure bonds – building our schools, roads and transit projects will become much more expensive for the Utah taxpayer,” said Treasurer Damschen. “Municipal bonds have been exempted from federal taxation since the establishment of the federal income tax system – and we’re fighting to ensure they stay that way.”
As outlined in the letter, “Proposals to change this commitment to tax-free municipal bonds would not only be costly for state and local taxpayers, but also result in fewer projects, fewer jobs and further deterioration of our infrastructure,” noted Damschen and the over 600 co-signers. Eliminating or capping the exemption would harm taxpayers throughout the nation because “municipalities will have to either curtail infrastructure projects or raise taxes on sales property or income.”
Tax-exempt municipal bonds are the primary financing mechanism for state and local infrastructure projects and provide essential funding for states, counties and localities. Three-quarters of all U.S. public infrastructure projects in the 21st century have been built by states and local governments utilizing the public-private partnership embodied in tax-exempt municipal bonds.
“There are proposals in D.C. to effectively increase the costs of building roads and schools in Utah on the backs of taxpayers – so we went to Washington to ensure our voice of opposition is heard,” said Treasurer Damschen.
The Treasurer signed the NAST-organized letter and with a team, met with various elected officials and congressional staff about the issue while in Washington, D.C. While broad overhaul of the federal tax system is not expected this year, Treasurer Damschen is taking pre-emptive steps to protect this important provision. During his meetings with congressional staff members, Damschen also addressed 529 college savings plans, the classification of municipal bonds under Basel III liquid asset requirements for banks, and the fiscal crisis in Puerto Rico.[Letter attached and covered by the Wall Street Journal. Treasurer Damschen available for interview.]