Magazine article Nation's Cities Weekly

In Focus: 'Let Cities Play by the Same Rules.'

Magazine article Nation's Cities Weekly

In Focus: 'Let Cities Play by the Same Rules.'

Article excerpt

Congress and the administration have an opportunity to let cities play by the same rules as the private sector this year. The opportunity could save cities hundreds million of dollars.

While millions of families and businesses are refinancing their outstanding debt this year to save money by benefiting from lower interest rates, cities and towns have found the complex federal rules a costly barrier to similar benefits. The different rules for local governments prevent local leaders from saving hundreds of millions of dollars and either reducing local taxes or meeting local needs or unfunded federal mandates.

The federal governments rules and regulations affecting municipal borrowing are so complex--and the penalties for violating the rules so great--that attempting to make the smartest leadership decisions to benefit local taxpayers can only be accomplished through reliance on an expensive army of bond counsel, investment bankers, accountants, and financial consultants. All too often the expense of relying on this outside help eliminates the incentives and benefits of refinancing.

Earlier this year, municipal officials had hoped that President Bush would sign the tax bill, which contained a number of provisions to simplify and reduce the cost of financing municipal improvements and operations, especially for smaller and medium sized cities. Although the administration had not proposed the changes, it was mostly supportive of simplification.

But when President Bush vetoed the tax bill, it left in limbo efforts to help communities reduce existing and new financing costs just at a time when record numbers of homeowners ad corporations were taking advantage of the extraordinary opportunity.

Now the administration faces a different decision: what to do when the so-called arbitrage rebate rules expire on May 12. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.