Magazine article Nation's Cities Weekly

NLC Calls for Continued Tax-Exempt Financing of Municipal Bonds

Magazine article Nation's Cities Weekly

NLC Calls for Continued Tax-Exempt Financing of Municipal Bonds

Article excerpt

As the newly created Joint Select Committee on Deficit Reduction, also known as the "Super Committee," begins developing recommendations to close the federal budget deficit, NLC and more than 20 national organizations are warning the committee not to eliminate tax-exempt financing to achieve this end.

The Super Committee, made up of six Democrats and six Republicans from both the House and Senate, is tasked with making recommendations to Congress that will reduce the deficit by at least $1.5 trillion over the next decade.

While the committee has not indicated whether it is considering eliminating the exemption, in 2010 the bipartisan National Commission on Fiscal Responsibility and Reform, led by former U.S. Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles, did include this as a specific recommendation for deficit reduction.

In a recent letter to Super Committee members, NLC and the other organizations highlighted the critical nature of the tax-exempt financing to state and local governments' ability to provide essential services, create jobs and stimulate economic growth.

The letter may be viewed at www.nlc.org/File Library/ Influence Federal Policy/ Advocacy/Legislative/ltr-jointtax-exempt-bonds-sept2011. pdf.

Tax-exempt bonds have been in place since the first federal income tax was implemented nearly a century ago and have been essential to the growth and development of local economies and communities.

David Hooks, councilman from Homewood, Ala., and chair of NLC's Finance, Administration and Intergovernmental Relations Policy and Advocacy Committee, said that "if Washington does away with tax-exempt state and municipal bonds, the federal government will have to find a mechanism to replace funding to our cities and states for building and maintaining our nation's infrastructure. …

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