ARCHIVE SITE - Last updated Jan. 19, 2017. Please visit www.NACWA.org for the latest NACWA information.
NACWA, AMWA Release Report Analyzing Importance of Tax Exempt Municipal Bonds to the Water Sector
The National Association of Clean Water Agencies (NACWA) and the Association of the Metropolitan Water Agencies (AMWA) released a report today entitled The Impacts of Altering Tax-Exempt Municipal Bond Financing on Public Drinking Water & Wastewater Systems . The report reviews options being discussed at the federal level to cap or eliminate the 100-year old tax exempt status of municipal bonds, a move that would cost the sector billions of dollars in infrastructure projects at a time when federal investment in water and wastewater infrastructure is waning.
This Advocacy Alert provides an overview of the report and NACWA’s ongoing advocacy efforts to maintain the current tax-exempt status of municipal bonds.
Overview of Municipal Bond Report
For more than a century, tax-exempt municipal bonds have been the most important source of funding for water and wastewater infrastructure projects in the United States. Since 2003, municipalities have issued $258 billion worth of tax-exempt municipal bonds to fund water and wastewater infrastructure – comprising approximately 16% of all municipal bond issuance for all infrastructure projects over this period. In 2012 alone, municipalities issued more than $39 billion in state and local tax-exempt bonds to finance water and sewer projects. The report released today examines the vital role of tax-exempt municipal bonds in funding drinking water and wastewater infrastructure.
This year, the Obama Administration’s Fiscal Year (FY) 2014 Budget request included a proposal to implement a 28 percent benefit cap on tax-exempt municipal bond interest for high income taxpayers. Most notably, the report finds that if the Administration’s 28% cap had been in place during 2012, it would have cost states and municipalities approximately $6 billion in additional expenses for water and wastewater infrastructure projects, resulting in lost projects, lost jobs, less economic growth, and significant added costs to the nation’s ratepayers.
The report emphasizes the serious negative impacts to the water sector and its ability to finance clean water infrastructure projects affordably from changes to the tax-exempt status of municipal bonds. It also highlights several recent case studies from NACWA and AMWA members around the country to demonstrate how their recent bond issuances would have been impacted by a cap or elimination of the tax-exemption.
NACWA Next Steps
In addition to its work on this analysis, NACWA has been participating in a coalition of national associations across infrastructure sectors to ensure that Congress does not scale back, or eliminate, the tax-exempt status of municipal bonds. The coalition, convened by the U.S. Conference of Mayors (USCM), is planning a large media campaign for later this summer to better educate Members of Congress about the importance of maintaining the current tax-exempt status.
As budget negotiations proceed and the Obama Administration’s proposal is considered, this report will serve as a key tool in NACWA’s advocacy efforts urging Congress and the Administration to avoid altering the tax exemption. Simply put, it is a bad idea for public health, the environment, jobs and the economy and comes at precisely the wrong time. NACWA and AMWA issued a joint press release today announcing the release of the report and have circulated the report to key congressional staff. NACWA also will be posting a blog on The Water Voice discussing the report and its findings later today.
NACWA will continue to advocate for maintaining the current tax-exempt status of municipal bonds and keep the membership updated of any developments in the Association’s actions and collaborative efforts.
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