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APGA Signs onto Statement Supporting Municipal Financing Tools

By Joshua St.Pierre posted 08-22-2024 12:22 PM

  
Recently, APGA and other stakeholders signed onto a statement for the record in support of testimony given during last month’s Senate Finance Committee hearing titled, “Tax Tools for Local Economic Development.” The testimony was given by an individual representing the Public Finance Network (PFN). Community-owned gas systems rely on different financing tools that enable them to invest in their infrastructure and, in some cases, prepay for large quantities of energy. One of these tools is the issuing of tax-exempt municipal bonds to raise the necessary capital for these expenditures. The statement focused on APGA’s support for topics addressed during the hearing. In her testimony, LaShea Lofton of PFN emphasized the need for Congress to protect the tax-exempt status of municipal bonds and pass legislation like the APGA-supported American Infrastructure Bonds Act. 
 
In the statement that APGA and other stakeholders submitted, two key points were highlighted from Lofton’s testimony that APGA members should be especially  glad to see:
 
  • The tax exemption of municipal bonds should be fully maintained as a critical tool for states, local governments, and nonprofits to invest in the vital infrastructure that supports local community needs; and
  • Enacting federal bond modernization provisions [like the American Infrastructure Bonds Act] will further enhance this financial tool and unlock additional infrastructure investment in urban, suburban, and rural communities.
 
Read the statement here. 
 
There is concern that the threat of the elimination of tax-exempt status is still prevalent. If state and local governments (like community-owned gas utilities) lose the ability to use tax-exempt bonds and are compelled to issue taxable bonds as an alternative, it is estimated that debt issuance costs would increase around 25%, and possibly more for smaller governments. This could raise costs for energy consumers.
 
Efforts like these are critically important as stakeholders coalesce to educate members of Congress on the importance of these municipal financing tools and the role that they play in enabling investment in communities across the country. For more information about this topic, read more here. Also, check out this video. 
 
Updates on municipal financing policy in Congress will be shared with the Legislative Committee. Please join that Committee if you are interested in following this issue.
 
For questions on this article, please contact Joshua St.Pierre of APGA staff by phone at 202-407-0015 or by email at jstpierre@apga.org.

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