25 House Reps sign muni bond letter

Bloomberg News

A bipartisan group of 25 House lawmakers have sent a letter to the chamber's top tax leader urging him to preserve the tax exemption on municipal bonds.

The lawmakers signed a "Dear Colleague" letter penned by Nebraska Republican Rep. Don Bacon that was addressed to House Ways and Means Chair Rep. Jason Smith, R-Mo.

Congress has put a target on the tax exemption as one of several potential revenue raisers to offset the cost of extending the Tax Cuts and Jobs Act. Bacon's letter is significant as municipal market advocates believe it would only take a few serious bond 'champions' to protect the financing tool given the Republican's razor-thin majority in the House.

"In just four days, the muni market and Representative Bacon's staff pulled off the incredible feat of gathering 25 bipartisan signatures," said Emily Brock, federal liaison for the Government Finance Officers Association. "It's an important speed bump for tax writers hoping to shed the tax exemption. But this rally has so many more twists and turns. More outreach is needed and fast."

Tax-exempt bonds have financed more than three-quarters of the nation's infrastructure, the letter said, citing the National League of Cities.

"We urge your support in preserving the federal tax-exemption for municipal bonds, a critical tool that enables state and local governments to fund essential infrastructure projects efficiently and affordably," the letter said. "It is imperative that we recognize the profound benefits that tax-exempt municipal bonds provide to our communities and constituents."

In an email to The Bond Buyer, Bacon said Nebraskans from smaller and rural communities would likely be hurt the most by the loss of the tax exemption.

"Municipal bonds are how Nebraska funds its big projects," Bacon said. "Without these bonds, there could be disruptions in infrastructure funding, fewer projects, and higher costs, higher taxes or both all across the state."

Among those who signed the letter: New York Republican Rep Nick LaLota; Rep. Wesley Bell, D-Mo.; Rep. Randy Weber, R-Texas; Rep. Jefferson Shreve, R-Ind.; Rep. Donald G. Davis, D-N.C.; Rep. Dusty Johnson, R-S.D.; Rep. Laura Friedman, D-Fla.; Rep. Marilyn Strickland, D-Wash.; and Rep. Joe Wilson, R-S.C.