Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida Urging Senator Ashley Moody, Senator Rick Scott, And Congresswoman Debbie Wasserman Schultz To Oppose The Elimination To The Tax-Exempt Status Of Municipal Bonds And Preserve and Protect Tax-Exempt Municipal Bonds In Any Upcoming Tax Reform To Be Considered By Congress.
Strategic Plan Focus
Financial Management & Administration
Body
Staff Recommends: Approval of the attached Resolution.
Explanation:
As the 119th US Congress works on tax reform, lawmakers will be considering whether to extend the tax cuts for corporations and individuals originally provided by the 2017 Tax Cuts and Jobs Act. These provisions are set to expire at the end of 2025.
One item under discussion is the elimination of tax exemption on municipal bonds. Tax exempt bonds are a key and crucial financing tool for local governments. The tax-exempt status allows municipalities to fund capital projects at lower interest rates and avoid increasing the tax burden on taxpayers. Tax-exempt financing demonstrates good local stewardship of public dollars, and has been a tool for local governments for over a century.
Nearly $400 billion in municipal bonds were issued in 2023, and $4.2 trillion between 2009 and 2019. If the costs of taxable debt financing averaged just 1% more than tax-exempt financing for those bonds issued in 2023, that would represent another $4 billion in debt on taxpayers. In their recently published white paper titled "Protecting Bonds to Build Infrastructure and Create Jobs", the Government Finance Officers Association ("GFOA") and the Public Finance Network ("PFN") estimate the global savings spread (the difference in costs between tax-exempt and taxable financings) at 210 basis points, which is equivalent to 2.1% in greater interest rate costs for taxable bond issuances.
Tax-exempt municipal bonds provide financing for large scale public projects and infrastructure such as roadways, ...
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