Despite months of lobbying by cities, the proposal includes a cap on the amount of municipal bond interest that can be deducted from taxes.
If the proposed 28 percent cap becomes law, cities and taxpayers nationwide will pay an additional $173 billion in interest for municipal bonds, significantly increasing the costs of infrastructure projects. Sen. Barbara Boxer and 13 other senators wrote to President Obama, voicing their opposition to the cap or elimination of the tax exemption. Cities are encouraged to continue their lobbying efforts on this issue to Sen. Dianne Feinstein and the California members of the U.S. House Representatives. Sample letters and background materials can be found on the League’s federal webpage
The President’s budget proposal includes: new infrastructure investment programs, preschool for all, job creation, tax reform and reducing the nation’s debt. He also proposes, as first announced in the State of the Union, $250 billion in new infrastructure funding above and beyond what it now available through the Fix-it-First and Rebuild America programs.
The proposal would provide $50 billion for upfront infrastructure investments, including $40 billion for Fix-it-First projects and $10 billion for a competitive program to encourage innovation in completing high-value infrastructure projects. In addition, a National Infrastructure Bank would be established and a new bond program would be created. The National Infrastructure Bank would leverage private and public capital to support infrastructure projects of national and regional significance. The bond program, America Fast Forward Bonds, would build on Build America Bonds to attract new sources of capital for infrastructure investment.
The proposal also includes modernizing the federal permitting process, establishing a new goal of cutting timelines in half. This builds on the current FHWA Everyday Counts Initiative.