(May 29, 2019) – US House Representatives Dutch Ruppersberger (D-MD) and Steve Stivers (R-OH)—Co-Chairs of the bipartisan House Municipal Finance Caucus—introduced The Investing in Our Communities Act (H.R. 2772) on May 15, which would amend the federal tax code to reinstate the option for a single advance refunding of municipal bonds.
NACWA joined a coalition of municipal government associations in supporting the bill and sent an Association letter of support to Congress outlining how this legislation could reduce clean water financing costs, free up more dollars for infrastructure investment, and help address affordability concerns at the local level.
The need for this new bill arose from the federal tax reform that was signed into law in December 2017. After significant debate and aggressive advocacy by NACWA and others, the 2017 tax reform law maintained the existing tax-exemption for municipal bonds, but unfortunately eliminated advance refunding. Prior to 2018, governmental bonds and 501(c)(3) bonds issued by state and local governments were permitted a single advance refunding. This allowed public issuers to take advantage of reductions in interest rates to realize billions of dollars in savings, which ultimately benefits ratepayers and taxpayers and which has saved NACWA utilities millions of dollars in financing costs. In the five-year period from 2013-2017, the advance refunding of municipal securities saved taxpayers at least $12 billion according to the Government Finance Officers Association (GFOA).
Since advance refunding was eliminated, NACWA has continued collaborating with a diverse group of municipal finance stakeholders to support reinstating advance refunding. NACWA is pleased to report this bill’s bipartisan introduction as congressional debate ramps up over the federal tax code. Any changes will be difficult to achieve however, given their impacts on federal revenues.
NACWA will keep Association membership informed of the bill’s progress and/or opportunities to engage, and urges concerned utilities to reach out to their congressional delegation in support of the bill.
For more information, contact Kristina Surfus, NACWA’s Legislative Director.