Following House passage of H.R. 1 on November 16 and Senate passage of S. 1 on December 2, the two chambers are now resolving differences between the bills in a conference committee. Republican leadership hopes to complete final text the week of December 12, with closing votes taking place the week of December 18.
During the week of December 5, House and Senate leaders appointed over a dozen conferees, or negotiators, to the official conference committee on tax reform. These members, along with congressional leadership, continue negotiating many aspects of the bill, including corporate tax rates, treatment of businesses filing as individuals, the state and local tax (SALT) deduction and more.
The conference committee is predominantly tasked with resolving differences between the two chambers’ bills. Some county priorities were eliminated in the House legislation but not the Senate’s, including the tax-exempt status of private activity bonds (PABs) and the New Markets Tax Credits (NMTC). The final legislation must determine whether to accept the House or Senate’s approach to these provisions.
That said, the final tax reform package could also revisit provisions both chambers treated similarly, including eliminating the SALT deduction and advance refunding bonds, which counties use to refinance tax-exempt municipal bonds. Two New Jersey congressmen, Reps. Leonard Lance (R-N.J.) and Josh Gottheimer (D-N.J.), unveiled a proposal that would fully preserve the SALT deduction, PABs and other deductions, and it would fully offset the costs of these changes. NACo, along with other local government partners, released a statement on December 7 supporting this proposal.
As tax reform negotiations continue, NACo also sent letters to House and Senate conferees asking them to fully preserve both SALT and advance refunding bonds. At a minimum, the letter asks legislators “to delay the effective date of the [advance refunding] provision to December 31, 2018 or limit the provision to the advance refunding of bonds issued after December 31, 2017, preserving the opportunity for counties with existing qualifying bonds to refund them.”
NACo will continue working with Congress and tax reform conferees to preserve county priorities vital to developing infrastructure, providing public safety and supporting local communities.