Council: Keep tax-exempt financingPublished 1:59am Wednesday, April 17, 2013
Washington’s City Council on Monday unanimously adopted a resolution in support of tax-exempt financing.
The council directed the city clerk to send copies of the resolution to the federal legislators representing the city in Congress.
As part of discussion on the federal budget deficit, the elimination or reduction of tax-exempt financing for municipal debt is being considered.
“If enacted, our borrowing costs would increase by at least 45%,” reads a memorandum from Matt Rauschenbach, the city’s chief financial officer and administrative services director, to the mayor and City Council.
“If that is enacted, we would see a tremendous increase in our borrowing costs, so it is recommended that we approve this resolution and send (it to) our congressional delegation,” City Manager Josh Kay said.
Tax-exempt municipal bonds are the primary means used by state and local governments finance three-quarters of the critical infrastructure of the nation, including roads, bridges, utility systems, schools and hospitals, according to the resolution. The exemption has allowed state and local governments to finance more than $1.65 trillion in infrastructure investment during the past 10 years, the resolution notes.
The exemption is “part of a more tan century-long system of reciprocal immunity under which owners of federal bonds are, in turn, not required to pay state and local income tax on the interest they receive from federal bonds,” reads the resolution.
In other action, the council unanimously adopted a resolution supporting the Partnership for the Sounds in its effort to retain state funding for its operations, including the North Carolina Estuarium in Washington. There is a possibility the N.C. General Assembly could reduce or eliminate funding for some nonprofit groups currently receiving state funding.
“As most agencies find themselves at this time with the state budget austerity plan in full swing, the Partnership for the Sounds is fully engaged in the state (budget) process. They’re trying to demonstrate their support throughout the region. They’ve got resolutions from every county where they provide service, every municipality where their partnership exists. They’ve asked us for one. The one we have in our packet was provided by the partnership,” said Mayor Archie Jennings.
For additional coverage of the council’s meeting, see future editions of the Washington Daily News.