The American Public Power Association today released a letter from more than 450 public power utilities to congressional Republican leaders and administration officials in support of their decision to retain the current-law tax exemption for municipal bonds in a tax reform framework announced by President Donald Trump last month.
“(Y)our decision to maintain the current-law tax-exemption for municipal bonds — in place since the tax code’s inception in 1913 – is good for our utilities, good for our customers and communities, and good for the country,” the utilities wrote.
Over the last decade, public power utilities have used tax-exempt municipal bonds to finance more than 1,200 projects worth $97 billion. Financing these electric system investments with taxable debt would have increased costs by an estimated $4.5 billion every year — costs that would be borne by public power customers.
Signatories to the letter included public power utilities large and small. These utilities serve — either directly or through the wholesale supply of electricity to other public power utilities — retail electric customers in 47 states, the vast majority of the more than 49 million Americans served by public power.
The September 27, 2017, “United Framework for Fixing Our Broken Tax Code” does not specifically mention municipal bonds, but administration officials briefing reporters on its details clarified that the framework would leave intact the current-law tax exemption for municipal bond interest. The letter is addressed to the six leaders who negotiated the framework: Treasury Secretary Stephen Mnuchin, National Economic Council Director Gary Cohn, House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), House Ways and Means Committee Chairman Kevin Brady (R-TX), and Senate Finance Committee Chairman Orrin Hatch (R-UT).
“The Association coordinated this effort, but it really was member-initiated and member-driven,” said Association President and CEO Sue Kelly.
It is worth noting that public power system investments are just a small part of the state and local investments financed by tax-exempt municipal bonds. In the last decade alone, tax-exempt municipal bonds have financed more than $2 trillion in investments in roads, bridges, schools, hospital, airports, ports, affordable housing, water treatment, fire houses, court houses, and police stations.
“Bonds really do build America. I am incredibly proud of the effort by public power utilities across the country to get that message out today,” Kelly said.