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The Tax-Exempt Status of Municipal Bonds is Being Threatened, We Need Your Help!

The Obama Administration’s Fiscal Year (FY) 2014 Budget request includes a proposal to implement a 28 percent benefit cap on tax-exempt municipal bond interest for high income taxpayers. According to a recent U.S. Conference of Mayors report, if this provision had been enacted over the last decade, it would have cost states and municipalities $173 billion (nearly $19 billion in 2012 alone) in interest expense for infrastructure projects and prevented many others from going forward.

NACWA is concerned about the negative impacts this proposal would have on the clean water sector and its ability to finance clean water infrastructure projects affordably. NACWA is partnering with the Association of Metropolitan Water Agencies on a white paper defining the direct impacts of the proposal on water sector utilities, and this paper is expected to be finalized by the end of the month.

But there are actions we must take now to ensure Congress does not go forward with the Administration’s proposal. We are reaching out to our public agency members to ask that you write to your Members of Congress and urge them to co-sponsor H.R. 112, a bi-partisan resolution that celebrates the 100th anniversary of keeping municipal bonds free from federal taxation and the important role tax-exempt municipal bonds have played in contributing to the economic growth of local communities. This important resolution, which already has over 50 cosponsors, puts Members of the U.S. House of Representatives on the record in support of municipal bonds and sends an unequivocal message to the Administration and Congressional leaders that there is broad, bi-partisan support for maintaining the tax-exempt status of these bonds and that any budget agreement should not limit it.

In testimony Wednesday before the House Interior and EPA Appropriations Subcommittee, Acting EPA Administrator, Bob Perciasepe, recognized the importance of the municipal bond market in generating significant private capital for infrastructure investments and acknowledged that the State Revolving Fund programs also leverage significant additional capital in the municipal bond market. The tax-exempt municipal bond market is a critical component in communities’ financing program and helps them meet water and wastewater obligations more affordably.

For information on how to contact your Members of Congress, please see NACWA’s Congressional Toolbox. If you have any questions or need assistance, please contact Hannah Mellman at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

We appreciate your help with this important effort!