130305_us_bonds_605_istockMohave County Supervisor Buster Johnson renewed his call for Congressional action to reject the call by President Obama to cap the tax exemption for municipal bonds that has been a staple of local governments over recent decades for funding local projects.  “It has been a popular refrain from the President over the past few years that we need a jobs bill to repair crumbling infrastructure, roads and bridges, and the irony is that local governments have been using tax exempt bonding to do exactly that over the past 20 years,” Johnson said Friday.

Johnson called on Arizona’s congressional delegation to support efforts by the National Association of Counties to oppose the President’s proposal.  “At last report, we have two members of the state’s congressional delegation that have taken a public position on this proposal and two more who are considering,” Johnson said.

President Obama’s FY2016 Budget Proposal includes a 28% cap on the value of certain tax benefits, including interest earned on new and outstanding state and local tax exempt bonds.  Johnson noted that in the years between 2003 and 2012, state and local governments invested $3.2 trillion in infrastructure utilizing the long term tax-exempt municipal bonds.   “Local investment in infrastructure through municipal bonds is two and one-half times more than the federal investment over a similar time frame.  It makes absolutely no sense if the President is really committed to rebuilding the nations depleted infrastructure to take away one of the main tools local governments employ to actually do the work of upgrading infrastructure,” Johnson said.

Johnson noted local projects in Mohave County have included six open bonds in Kingman at present, including a $16.7M issue for improvements to the Airway Overpass Improvement district.  In Bullhead City, Johnson noted more than $70M has been utilized for local improvements in four issues dating back to 2006.  While in Lake Havasu City, revenue bonds were issued for, among other things, the city’s sewer infrastructure project, which accounted for the largest revenue bond measure in the country for a sewer project.  In addition, Mohave County has used the funding mechanism for major public improvements including land acquisition and construction of administrative facilities, a juvenile detention center and a jail as well as library improvements and landfill financing.

“The President is foreclosing on the local governments’ and their flexibility to meet infrastructure requirements that are not being funded at the federal level,” Johnson concluded.  “The President’s proposal would mean that if local governments want to make major improvements going forward they would more than likely be forced to impose new or additional taxes.”

Johnson said he expected the matter to get major congressional attention in the coming week as congressmen return to Washington.

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