85R12726 BPG-D

By: Turner H.C.R. No. 82

CONCURRENT RESOLUTION

WHEREAS, Interest on municipal bonds has been excluded from taxation since the enactment of the federal income tax in 1913; and

WHEREAS, Municipal bond tax exemptions provide state and local governments with a subsidy to finance crucial infrastructure projects; because municipal bonds are tax-exempt, investors are willing to accept lower interest payments, thus reducing borrowing costs for governments; and

WHEREAS, Approximately 6 percent of all bonds issued each year in the United States are municipal bonds, and in 2016, state and local governments issued nearly $424 billion in tax-exempt bonds, representing a six-year high and a 12 percent increase over 2015; governmental bonds typically fund schools, transportation infrastructure, utilities, and other improvements, creating jobs while improving the quality of life for area residents; and

WHEREAS, State and local governments make approximately 75 percent, the overwhelming majority, of our nation's infrastructure investments, and many of those investments are financed with municipal bonds; and

WHEREAS, The tax exemption for municipal bonds allows the federal government to support infrastructure investment in a manner that minimizes federal bureaucracy and maximizes community decision making; and

WHEREAS, Over the years, the municipal bond market has offered greater predictability than most, and it holds tremendous appeal for individual investors, especially those of retirement age; municipal bonds are owned disproportionately by households, rather than by banks and other financial institutions, and a Brookings Institution study found that the average age of municipal bondholders was 62; and

WHEREAS, If the tax exemption for municipal bonds were to be repealed, state and local governments would have to offer higher returns to continue to attract investors, and taxpayers would pay more for important infrastructure projects; increased debt service costs would result in fewer such projects in an era in which the safety and competitiveness of the nation's infrastructure gives cause for tremendous concern; and

WHEREAS, For more than a century, the highly efficient municipal bond market has helped to spur vital infrastructure investment and associated job creation, and eliminating the federal tax exemption would jeopardize these low-risk investment opportunities; now, therefore, be it

RESOLVED, That the 85th Legislature of the State of Texas hereby respectfully urge the United States Congress to retain the tax exemption for municipal bonds; and, be it further

RESOLVED, That the Texas secretary of state forward official copies of this resolution to the president of the United States, to the president of the Senate and the speaker of the House of Representatives of the United States Congress, and to all the members of the Texas delegation to Congress with the request that this resolution be entered in the Congressional Record as a memorial to the Congress of the United States of America.