National associations urge Congress to change bond provisions in comprehensive tax framework
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BlogOn November 6, NACo, in partnership with other national organizations representing members of the municipal bond issuer and user community, wrote a letter to U.S. House Ways and Means Chairman Kevin Brady (R-Texas) urging the chairman and committee members to reconsider the PABs and advance refunding bonds provisions in H.R. 1.National associations urge Congress to change bond provisions in comprehensive tax framework
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Blog
National associations urge Congress to change bond provisions in comprehensive tax framework
On November 2, House Ways and Means Committee Chairman Kevin Brady (R-Texas) released H.R. 1, the Tax Cuts and Jobs Act. This comprehensive tax reform legislation would alter nearly every portion of the current U.S. tax code. One major county priority, the tax-exempt status of municipal bonds, is largely preserved under the new bill. However, H.R. 1 includes other changes to various bond provisions, many of which could impact county finances and projects: it eliminates the tax exemption for both Private Activity Bonds (PABs) and advance refunding bonds, which counties use to refinance their municipal bonds at lower interest rates. The combined impact of all the bond proposals in H.R. 1 would be an additional $60 billion in federal revenue at the expense of local governments and infrastructure development.
On November 6, NACo, in partnership with other national organizations representing members of the municipal bond issuer and user community, wrote a letter to U.S. House Ways and Means Chairman Kevin Brady (R-Texas) urging the chairman and committee members to reconsider the PABs and advance refunding bonds provisions in H.R. 1. The letter notes these provisions would eliminate crucial financing tools utilized by local governments “to provide critical investments in infrastructure and save tax payer money.”
PABs are tax-exempt bonds issued by or on behalf of local or state governments to providing special financing benefits for qualified projects. Counties use PABs extensively for airport facilities, hospitals, solid waste facilities, affordable housing and other large construction projects. Advance refunding bonds are most commonly used by state and local governments and provides substantial savings to taxpayers throughout the country as interest rates fluctuate. Under current law, counties may only refinance a bond once. According to the letter, “in 2016, the advance refunding of more than $120 billion of municipal securities saved taxpayers at least $3 billion.”
The House Ways and Means Committee began marking up the Tax Cuts and Jobs Act on November 6, and could finish as soon as November 9. The Senate Finance Committee plans to release their version of the bill after the House finishes its markup.
Municipal bonds have been a fundamental feature of the United States tax code since 1913 and remain the primary method used by states and local governments to fund public infrastructure projects, including our roads, bridges, schools, hospitals, water infrastructure and much more. As tax reform discussions continue, NACo will continue working with Congress to ensure counties’ interest are represented and maintained in a comprehensive tax overhaul.
Additional NACo Resources:
- To read the full letter, please click here.
- To access NACo’s municipal bonds toolkit, please click here.
- To access NACo’s policy brief on municipal bonds, please click here.
On November 6, NACo, in partnership with other national organizations representing members of the municipal bond issuer and user community, wrote a letter to U.S. House Ways and Means Chairman Kevin Brady (R-Texas) urging the chairman and committee members to reconsider the PABs and advance refunding bonds provisions in H.R. 1.2017-11-07Blog2017-11-08
On November 2, House Ways and Means Committee Chairman Kevin Brady (R-Texas) released H.R. 1, the Tax Cuts and Jobs Act. This comprehensive tax reform legislation would alter nearly every portion of the current U.S. tax code. One major county priority, the tax-exempt status of municipal bonds, is largely preserved under the new bill. However, H.R. 1 includes other changes to various bond provisions, many of which could impact county finances and projects: it eliminates the tax exemption for both Private Activity Bonds (PABs) and advance refunding bonds, which counties use to refinance their municipal bonds at lower interest rates. The combined impact of all the bond proposals in H.R. 1 would be an additional $60 billion in federal revenue at the expense of local governments and infrastructure development.
On November 6, NACo, in partnership with other national organizations representing members of the municipal bond issuer and user community, wrote a letter to U.S. House Ways and Means Chairman Kevin Brady (R-Texas) urging the chairman and committee members to reconsider the PABs and advance refunding bonds provisions in H.R. 1. The letter notes these provisions would eliminate crucial financing tools utilized by local governments “to provide critical investments in infrastructure and save tax payer money.”
PABs are tax-exempt bonds issued by or on behalf of local or state governments to providing special financing benefits for qualified projects. Counties use PABs extensively for airport facilities, hospitals, solid waste facilities, affordable housing and other large construction projects. Advance refunding bonds are most commonly used by state and local governments and provides substantial savings to taxpayers throughout the country as interest rates fluctuate. Under current law, counties may only refinance a bond once. According to the letter, “in 2016, the advance refunding of more than $120 billion of municipal securities saved taxpayers at least $3 billion.”
The House Ways and Means Committee began marking up the Tax Cuts and Jobs Act on November 6, and could finish as soon as November 9. The Senate Finance Committee plans to release their version of the bill after the House finishes its markup.
Municipal bonds have been a fundamental feature of the United States tax code since 1913 and remain the primary method used by states and local governments to fund public infrastructure projects, including our roads, bridges, schools, hospitals, water infrastructure and much more. As tax reform discussions continue, NACo will continue working with Congress to ensure counties’ interest are represented and maintained in a comprehensive tax overhaul.
Additional NACo Resources:

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Policy Brief
Support legislation that would restore advance refunding bonds.
Urge your members of Congress to introduce and support the passage of legislation that would restore advance refunding bonds. -
Policy Brief
Restore the Balance of Federalism and Optimize Intergovernmental Partnerships
ACTION NEEDED: -
Reports & Toolkits
Legislative Analysis for Counties: The Consolidated Appropriations Act of 2023
This analysis includes funding highlights for key programs impacting counties. -
Reports & Toolkits
Resource Hub for Counties: State, Local, Tribal and Territorial Fiscal Recovery, Infrastructure And Disaster Relief Flexibility Act
The bipartisan State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act will provide additional flexibility for the $350 billion Coronavirus State and Local Fiscal Recovery Fund authorized under the American Rescue Plant Act. -
Press Release
State And Local Government Associations Commend Congress For Infrastructure And Disaster Flexibility
With the enactment of the Consolidated Appropriations Act of 2023, the seven leading organizations representing state and local governments at the federal level thank Congress for providing flexibility to use American Rescue Plan Act funds for purposes of infrastructure, neighborhood revitalization, and disaster relief. -
Reports & Toolkits
Legislative Analysis for Counties: State, Local, Tribal and Territorial Fiscal Recovery, Infrastructure And Disaster Relief Flexibility Act
VIEW YOUR COUNTY’S ARPA FLEXIBLE FUND ALLOCATION UNDER S. 3011
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Reports & Toolkits
State and Local Fiscal Recovery Fund Resource Hub
Explore NACo's resource hub for the ARPA State and Local Fiscal Recovery Fund.Reports & Toolkitsdocument010512:15 pmReports & Toolkits<table border="1" cellpadding="1" cellspacing="1" style="width:100%" summary="call-out transparent">
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ClearGov
ClearGov® is the leading provider of Budget Cycle Management software, focused on helping local governments streamline the annual budgeting process by improving the collection, creation, and communication of their budgets.pagepagepage<table border="1" cellpadding="1" cellspacing="1" style="width:100%" summary="call-out transparent">
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Finance, Pensions & Intergovernmental Affairs Steering Committee
All matters pertaining to the financial resources of counties, fiscal management, federal assistance, municipal borrowing, county revenues, federal budget, federal tax reform, elections and Native American issues. Policy Platform & Resolutions 2022-2023 2022 NACo Legislative Prioritiespagepagepage<p>All matters pertaining to the financial resources of counties, fiscal management, federal assistance, municipal borrowing, county revenues, federal budget, federal tax reform, elections and Native American issues.</p>
Contact
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Director of Strategic Relations(202) 661-8805
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Policy BriefSupport legislation that would restore advance refunding bonds.Jan. 31, 2023
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