There were two camps of committee members: those who questioned whether high income earners should receive the benefit the exemption provides versus those who are supportive of the tax exemption and believe limiting the exemption would lead to fewer jobs, less infrastructure investment and higher taxes and fees for city residents.
It was evident that concerns raised by cities were being heard when committee members referenced the letters they’ve received from their city councils opposing changes to the exemption. However, the fight is far from over.
The discussion on the tax exemption for Municipal Bonds will continue as part of the broader tax reform debate as well as federal budget negotiations. If cities have not yet submitted a letter on the issue to their federal representatives, they are encouraged to do so. The League has a sample letter available on the League's federal webpage
Congress Passes FY 2013 Continuing Resolution, FY 2014 Under Debate
In related news, the House and Senate passed a continuing resolution that would fund the federal government through the end of September. This action was needed to avoid a federal government shutdown when the current resolution expires on March 27.
The House also adopted a budget resolution for FY 2014. If enacted, the plan would cut domestic spending by an additional $50 billion than cuts already imposed by sequestration and would balance the budget in 10 years. The Senate has begun debating its version of the FY 2014 and is expected to hold a final vote by the end of next week.