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Muni Bond Interest Cap Would Increase Financing Costs by $173 Billion

March 13, 2013  |  National League of Cities, National Association of Counties & U.S. Conference of Mayors
The information provided here is for informational and educational purposes and does not necessarily reflect the opinion and/or policy position of the Georgia Municipal Association.

The imposition of a 28% benefit cap on interest income on municipal bonds would have increased costs by over $173 billion since 2003.


A new report from the National League of Cities, National Association of Counties, and the U.S. Conference of Mayors estimates that if a proposed 28% benefit cap on interest income on municipal bonds was in place over the last ten years, it would have increased the borrowing costs to state and local governments by over $173 billion. Complete elimination of the cap would have increased borrowing costs by over $495 billion.
 
According to the report: 
 
  • In the last decade (2003–2012) state and local governments financed more than $1.65 trillion of infrastructure projects through tax-exempt bonds;
  • $514 billion of primary and secondary schools were built with financing from tax exempt bonds;
  • $288 billion of financing went to general acute care hospitals;
  • $258 billion funded water and sewer facilities;
  • $178 billion went to roads, highways, and streets;
  • $147 billion funded public power projects; and
  • $105.6 billion went to mass transit projects.
More information can be found in Protecting Bonds to Save Infrastructure and Jobs (PDF, 774KB).