In an atmosphere awash with fiscal negotiations and a looming tax package, it’s become increasingly evident that municipal bond issuers must seize the moment. The political climate in Washington, D.C. has created a ticking clock for local officials, who need to advocate vigorously for the preservation of tax exemptions on municipal bonds and private activity bonds (PABs). With key discussions unfolding between the House Ways and Means committee and the Senate Finance committee, now is not the time for passivity. Those who choose to remain quietly on the sidelines risk losing out on vital financial tools that support community development.
It is important to understand that the interests at stake are not merely bureaucratic numbers; they represent real impacts on airports, hospitals, and schools. The message is clear: if local entities do not communicate their needs effectively, they cannot expect the federal machinery to act in their favor. Jarrod Loadholt from Ice Miller LLP emphasizes this urgency—“Don’t hope someone else is going to solve this for you.” The time for advocacy is now, and it needs to be loud and persistent.
Municipal Bonds: The Lifeblood of Community Development
Municipal bonds serve as a lifeline for financing essential infrastructure projects and community initiatives. As Kristopher Wahlers notes, airports alone issued an impressive $22 billion in PABs in 2024. These bonds enable the construction of crucial facilities that may determine the quality of life for countless citizens. However, the erosion of tax-exempt status poses a significant threat to these vital resources.
Opponents of tax exemptions may argue they create unjust advantages, yet this position overlooks the broader consequences. Limiting PABs ultimately hampers access to affordable financing for communities, making it challenging to support essential services. It is a false economy to think that eliminating tax exemptions will yield significant savings. Instead, it creates gaps in funding and points to a troubling precedent where collaboration with local entities is undervalued.
Why Local Voices Matter More Than Lobbyists
It’s easy to dismiss lobbying efforts, often seen as self-serving pursuits that rarely resonate with the common folk. However, the experiences shared by local officials wielding real-life case studies can cut through the noise. Toby Rittner, the CDFA President and CEO, articulates this concern: local officials often have a stronger impact than seasoned lobbyists. Their testimonies connect directly with the legislators who have the power to effect change.
During a recent advocacy effort, Rittner visited Republican offices, only to learn that lawmakers were on the fence about eliminating PAB tax exemptions. “We need a really good reason not to eliminate [the PABs tax exemption],” they indicated. This highlights the necessity for presenters of the issue to not only be articulate but thoroughly informed about local stakes, ensuring constituents see tangible ramifications if they fail to act.
Advocating in a Distracted Political Climate
The ongoing confrontation between municipal interests and the federal government creates a precarious situation. The current political climate often fosters a hostile atmosphere towards community-driven funding initiatives. Legislative bodies are under pressure to tighten budgets and project fiscal conservatism, and sadly, community impacts can be overlooked in the process.
In this reality, advocacy groups like the CDFA play a crucial role in galvanizing efforts to protect tax exemptions. They provide resources and strategic frameworks through which local entities can effectively communicate the nuances of their projects to lawmakers. Rittner’s call for personalized letters detailing specific case studies speaks to a larger need for localized advocacy that illustrates direct repercussions. It’s a desperate plea for transparency and engagement from the constituents who have the most to lose.
The Case for Grassroots Action
Unsigned letters from unsuspecting residents will likely fall into an abyss of political indifference. Conversely, well-structured, grassroots advocacy highlights that lawmakers cannot simply ignore their constituents’ voices. Ensuring representatives hear firsthand stories of how eliminating tax exemptions would harm local projects makes an undeniable mark on their decision-making process.
This battle for the taxation status of municipal bonds is not merely about numbers on a spreadsheet; it encompasses the broader implications of community growth and infrastructure resilience. Pressing forward with grassroots activism is paramount—not just for communities but also for ensuring that future generations can experience the benefits of well-funded, tax-exempt municipal development. Each local official must rally their communities and become advocates, turning storytelling into a powerful tool of change as they engage with Washington lawmakers.