House and Senate tax staff and members seemed receptive to the Bond Dealers of America's plea to preserve the municipal bond tax exemption when the lobbying group visited Capitol Hill Thursday but stressed that all options remain in play as lawmakers look to cover the costs of its reconciliation bill.
"The meetings were productive and staff seemed well informed and receptive to our thoughts and ideas but reiterated multiple times that everything is on the table," said Brett Bolton, the BDA's vice president of federal legislative and regulatory policy.
The BDA visited committee staff of the House ways and Means and Senate Finance Committees, the two panels that will oversee the crafting a reconciliation package that will seek to extend the 2017 Tax Cuts and Jobs Act.
The meetings are part of the municipal market's efforts to save the tax exemption as Congress looks for revenue raisers to offset the cost of extending major provisions of the Tax Cuts and Jobs Act that expire later this year.
The BDA meeting came as Republican House leaders met with President Donald Trump to try to reach agreement on a budget resolution that marks the first step in the reconciliation process. During the meeting, the White House outlined Trump's top priorities, which included adjusting the deduction cap on state and local taxes and "eliminat[ing] all the special tax breaks for billionaire sports team owners." It wasn't immediately clear if that meant killing tax-exempt bonds for stadium projects, a controversial tool
An early version of the original TCJA in 2017 prohibited the use of tax-exempt bonds for professional sports stadiums for an estimated gain of $200 million of revenue over 10 years. The provision was dropped in the final version.
Also chopped in early House drafts of the original TCJA were private activity bonds, which many market participants, including the BDA, believe face heightened threat this year. "We're concerned that playbook for PABs still exists for some staff members," Bolton said.
The financing tool in 2017 was ultimately saved by a group of proponents led by Sen. John Cornyn, R-Texas. The BDA met with members of Cornyn's staff Thursday who said their position on the importance of PABs remains unchanged since 2017, Bolton said.
PABs account for around 25% of the muni market including sectors like airports, housing, energy and health care. A December Congressional Budget Office
Bolton also said there is "growing confidence" that Congress would not try to
House Speaker Mike Johnson, R-La., said Thursday after the Trump meeting that the party is closer to reaching agreement on the topline number for a budget resolution, which could be released next week. One of the remaining loose ends is the debate over increasing or eliminating the current $10,000 SALT cap, which Republicans from high-tax states like New York and New Jersey have named as their top concern.
"We didn't solve the SALT problem, but we got probably closer even on that issue," Johnson said.
The cost of lifting the SALT deduction cap is between $200 billion to $1.2 trillion through 2035, according to the
Using tax-exempt bonds to finance sports stadiums cost the federal government $4.3 billion in lost revenue,
