Counties talk about tax-exempt municipal bonds during 2025 Infrastructure Week

Key Takeaways

On May 13, during the 13th Annual Infrastructure Week, NACo hosted a working group discussion titled “The Case for Tax-Exempt Municipal Bonds” with Commissioner Eileen Higgins of Miami-Dade County, Fla.

The event followed the Infrastructure Week Main Event organized by United for Infrastructure (UFI), which included remarks and panel discussions with key leaders — featuring Sen. Shelley Moore Capito and U.S. Department of Transportation Deputy Assistant Secretary for Policy Loren Smith. NACo serves on UFI’s Steering Committee.

Built by bonds: How counties build infrastructure through municipal bonds

During the working group, Commissioner Higgins—Chair of NACo’s Transportation Steering Committee—and Paige Mellerio—NACo’s Legislative Director for Finance, Pensions and Intergovernmental Affairs—emphasized the critical role tax-exempt municipal bonds play in supporting infrastructure investments at the local level.

In her remarks, Commissioner Higgins highlighted the role the tax-exemption of municipal bond interest lowers the costs of investing in our communities for our taxpayers. Without the tax exemption, the high costs of large-scale infrastructure projects would be prohibitive for investment. The Commissioner highlighted the various types of infrastructure financed by tax-exempt bonds in Miami-Dade County, including traditional surface transportation projects like roads and bridges, low-income housing and even helicopters for search and rescue operations under Florida-Task Force 1 (FL-TF1).  

This conversation occurred as the U.S. House Ways & Means Committee marked up its title of larger budget reconciliation legislation to extend key provisions of the 2017 Tax Cuts and Jobs Act. Counties were concerned that the municipal bond tax-exemption could be eliminated to generate federal revenue and offset the overall price tag of the bill. While the bill that was marked up by the tax-writing committee on May 13 leaves municipal bonds untouched, Commissioner Higgins emphasized that continued advocacy from county leaders and others with a vested stake in infrastructure and community development is still necessary. While this is a welcome development as negotiations around the reconciliation bill continue, we must ensure this critical local financing tool is preserved in the final law.    

NACo’s ongoing advocacy  

As Congress continues to draft and negotiate budget reconciliation legislation, counties urge lawmakers to preserve the municipal bond tax exemption to protect local decision making about infrastructure investments in our communities. Tax-exempt municipal bonds have helped state and local governments finance approximately $3.8 billion in infrastructure investments over the past decade and are a proven local financing tool that help us ensure our investments are cost-effective for our residents.  Without tax-exemption, borrowing costs could rise by 210 basis points (or 2.1 percentage points) or approximately $823 billion over the next decade. This equates to a tax and rate increase of approximately $6,554 per U.S. household. To avoid burdening our taxpayers with higher infrastructure costs, Congress should work to ensure the municipal bond tax-exemption remains preserved.

The ultimate outcome of the effort to preserve the municipal bond tax exemption will have major ramifications for the next surface transportation reauthorization legislation as well. Counties own 44 percent of public road miles and 38 percent of bridges but receive little federal funding for the upkeep of these important assets. Having access to tax-exempt municipal bonds is therefore crucial for funding the maintenance of these roads and bridges, as well as for providing the non-federal match for discretionary grant awards and other federal funding.  

Should the tax-exempt status be altered or removed, it would undercut our nation’s infrastructure and drastically alter county needs from the next surface transportation reauthorization bill. As such, NACo included an ask to protect municipal bonds in its letter to the House Committee on Transportation & Infrastructure with county priorities for the upcoming legislation.

Additional resources

Advocacy Toolkit: Counties and Tax Reform in 119th Congress

Letter to House T&I Committee Subcommittee on Highways and Transit