NACWA Moves to Protect Municipal Bond Tax Exemption

Jan 31, 2017

Senate Session
President Trump and the Republican majorities in both the House and Senate have made clear that tax reform is a key priority this year, which could put municipal tax-exempt bonds at risk. During the GOP retreat in Philadelphia last week, the President and congressional leaders honed in on their “First 200 days” agenda, which includes passing legislation to overhaul the tax code. Of key concern to clean water utilities: an overhaul of the tax code could include altering or eliminating the tax-exempt status of municipal bonds. 

To jumpstart its advocacy on this issue, NACWA partnered with the Association of Metropolitan Water Agencies (AMWA) this month to obtain a financial analysis regarding the use of tax-exempt municipal bonds by water and wastewater utilities, and the impact that capping or eliminating the exemption would have on local entities and ratepayers. The analysis includes data through 2016 and provides an update to a 2013 report on which NACWA and AMWA collaborated. The analysis, completed January 26, found that in 2016 alone the value of bond issuances by water and wastewater utilities nationwide exceeded $38 billion. Had these bonds been fully taxed, the higher interest rates required would have increased debt service costs by 25 percent, for a total of $16 billion over an expected 30-year repayment period. 

Association staff are preparing national and state fact sheets to help communicate this information to Congress and will be providing membership with more information soon.  Discussion of this important issue will also be a key advocacy focus during Water Week 2017. To discuss municipal bonds advocacy contact Kristina Surfus, NACWA’s Legislative Affairs Manager.

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