Marathon Co. OK’s resolution to protect tax-exempt bonds
By Kevin O’Brien
Marathon County supervisors voted overwhelmingly last week to protect tax-exempt borrowing for local governments in response to federal efforts to raise trillions of dollars in tax revenues.
Tax-exempt bonds have been used to finance over $4 trillion in local infrastructure improvements across the United States over the past decade, according to the resolution passed by the board. Eliminating that tax exemption would increase borrowing costs for counties and municipalities by an estimated $823 billion, or $6,554 per household, according to the National Association of Counties (NACo), which drafted the resolution.
Board chairman Kurt Gibbs, speaking at an April 10 Executive Committee meeting, said the resolution came out of the most recent installment of a web series put on by NACo regarding the Trump administration’s many executive orders and budget priorities.
Gibbs said the House of Representatives recently passed a budget plan that would increase the national debt by at least $2 trillion and also make the 2017 tax cuts, passed during the first Trump administration, permanent.
“They have a significant cost, and that cost is almost $3.7 trillion over a 10-year period,” he said.
In an effort to chisel away at that projected debt increase, Gibbs said Congress is looking at several “revenue raisers” – including the possibility of taxing municipal bonds. If that were to happen, he said it would increase revenue for the federal government by an estimated $364 billion, but it would also raise the cost of borrowing for local governments by 2.1 percent.
Gibbs said the county routinely benefits from tax-exempt bonding when it undertakes major projects, such as the $80 million in borrowing for renovations at North Central Health Care.
The increase in tax revenue and the resulting costs to local governments would not be “dollar for dollar,” he said, and it would essentially shift over $820 billion in tax burden to local governments.
Supervisor Chris Dickinson, the only board member to vote against the resolution last week, said at the Executive Committee meeting that a “piece of paper” issued by the county is not needed to preserve tax-exempt bonding.
“I don’t really think it’s necessary to do a resolution simply because I don’t think it’s something that’s going to go away,” he said. “This has happened in other administrations, where they’ve threatened to do this, and it would take quite an effort to pass through Congress.”
Supervisor John Robinson, however, said he believes the county should take a stand on the issue, due to the potential impact on borrowing for future projects and the possibility of higher costs for local taxpayers.
“I think it would be worthwhile for us to weigh in,” he said. “Many times we’ll pass resolutions that don’t necessarily impact the operations of the county, but this could have a very significant one.”
