September 20, 2013
RE: Please take action to protect municipal bonds/ Important seminar scheduled
We are rapidly approaching both the beginning of the Federal government’s next Fiscal Year and the Federal debt ceiling limit. In this situation, Congress and the Administration will need to consider a number of options to prevent default and to avert program shut-downs. While we recognize the challenges, we are very concerned that negotiations might turn to proposals that could seek to balance the federal budget at the expense of municipal governments. One recommendation that would have severe consequences is the proposal to repeal or cap the tax-exempt status of interest on bonds issued by state and local governments.
Tax-exempt bonds are a critical source of public finance and are used to help build roads, bridges, sewers, drinking and wastewater facilities, schools, affordable housing and more. Experts estimate that, should Congress repeal or cap this exemption, there would be an immediate increase of up to 2 percentage points for the interest costs on all new issuances of municipal bonds. Since tax-exempt municipal bonds are issued primarily for necessary infrastructure and capital projects, the result of this increase would be either a reduction of infrastructure/capital improvement spending by municipalities, counties, school districts and utility authorities, or significant increases in the costs of these projects. Such increases will be borne by property taxpayers and utility ratepayers throughout the state.
We have repeatedly urged our Congressional Delegation to reject any proposal to eliminate or limit the exemption. Please contact Senators Menendez and Chiesa and your Congressman and urge them to support efforts to protect the tax exempt status of municipal bonds.
In an effort to promote awareness about the issue and what you can do to advance our efforts, League Associate Counsel John L. Kraft, Esq, has scheduled a seminar that will be held:
Thursday, October 3, 2013
8:30 a.m. – 12 Noon
New Jersey Law Center
New Brunswick, NJ
Full details on this session can be accessed through our October Calendar page at http://www.njslom.org/seminars.html
Very truly yours,
Janice S. Mironov, President
New Jersey League of Municipalities
Mayor, East Windsor Township