Dec. 8, 2017 — On Dec. 6, WEF and other water sector organizations sent a letter to Congressional leaders regarding tax reform legislation, expressing concerns over the treatment of private activity bonds (PABs) and advance refunding bonds in the House and Senate versions of the Tax Cuts and Jobs Act. As the letter expresses, these financing tools are very important to the local communities.
Earlier this year, WEF and others sent a letter to the House Ways and Means Chair Kevin Brady expressing a strong opposition to a provision in HR 1 that would repeal the ability to advance refund municipal bonds (Section 3602).
Municipal bonds are a fundamental financing tool for water and wastewater – critical public services with significant investment needs that are projected to grow over the coming decade. While WEF and the other organizations are relieved the bills maintain the tax-exempt status for municipal-issued bonds for water and infrastructure projects, Section 3602 - repealing the ability to advance refund municipal bonds - is concerning.
In 2016 alone, nearly $38 billion in tax-exempt municipal bonds were issued for water and wastewater projects, helping local communities meet critical infrastructure needs. Through advance refunding, the municipal water and wastewater sector has a long history of being able to respond to interest rate fluctuation. Advance refunding leads to additional funds being available for utility investment and/or significant savings of water ratepayer and taxpayer dollars.
On November 16th, the House passed its version of tax reform legislation, HR 1. In the early hours of December 2nd, the Senate passed a revised bill, which has key differences from HR 1.
This week, the House and Senate both voted to go to conference to reconcile the two tax bills with a goal of sending a final bill to President Trump's desk by Christmas to be signed into law. (The Hill, 12/6/2017)
Download a copy of the Dec. 6 letter to congressional leaders.
