State treasurers call for restoring tax exemption to help fund infrastructure

State treasurers call for restoring tax exemption to help fund infrastructure
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The National Association of State Treasurers (NAST) is urging Congress to reinstate a tax preference that was eliminated in the GOP tax-cut law, arguing that doing so would help state and local governments finance infrastructure projects.

The group wants Congress to restore the tax exemption for advance refunding bonds, which state and local governments issue to refinance their debt.


"Advance refunding bonds save money for taxpayers and free up money for additional infrastructure projects, by allowing state and local issuers to refinance bonds at a lower interest rate," NAST wrote in a letter this week to House and Senate leaders of both parties. "Last year, more than $100 billion in advance refunding bonds were issued, saving hundreds of millions of taxpayer dollars that could then be reinvested back into vital infrastructure projects."

The group lent its support to legislation on advance refunding bonds that was introduced by Reps. Randy HultgrenRandall (Randy) Mark HultgrenIllinois New Members 2019 Republicans must learn from the election mistake on immigration Newly elected Dems downplay midterms results as referendum on Trump MORE (R-Ill.) and Dutch RuppersbergerCharles (Dutch) Albert RuppersbergerGOP-controlled Senate breaks with Trump on Saudi vote Overnight Defense: Trump says he may cancel G-20 meeting with Putin | Three service members killed in Afghanistan | Active-shooter drill sparks panic at Walter Reed Panic at Walter Reed after exercise mistaken as active shooter MORE (D-Md.).

"This bill would ensure state and local governments are not forced to pay higher borrowing costs or curtail critical infrastructure projects," the group wrote.

The letter comes one week after President TrumpDonald John TrumpFamily says Trump travel ban preventing mother from seeing dying son Saudi Arabia rejects Senate position on Khashoggi killing Five things to know about the Trump inauguration investigation MORE unveiled his long-awaited infrastructure proposal, which calls for state and local governments and the private sector to provide much of the funding for projects.

"State and local governments finance more than 75 percent of all U.S. infrastructure projects, and as experts on infrastructure financing, we believe that reinstating the tax-exempt status of [advance refunding] bonds will be critical for state and local governments to properly execute any infrastructure proposal," NAST wrote.

Trump's plan calls for the expansion of private activity bonds, a type of tax-exempt bond that can be used to finance projects with some private use.

NAST praised the proposed expansion of private activity bonds, saying it "is a common sense solution that will result in more infrastructure built for the public good."