Won’t support changes to bonds
In October 2009, the Lake Champlain Bridge was forced to close after 80 years of continuous use, severing a vital link between Vermont and New York. Because of the federal tax exemption on municipal bonds, we were able to build a new bridge much cheaper than we might otherwise have. In recent weeks, Congress has proposed eliminating the tax exemption for municipal bonds. Any step toward removing or capping this exemption would increase borrowing costs, placing a greater burden on Vermont’s taxpayers.
Why preserve the tax-exempt status of state and local government bonds? Because states and municipalities save an average of 25 to 30 percent on interest costs compared with taxable bonds. The new Lake Champlain Bridge is a perfect example: Municipal bonds formed the backbone of the state’s financing plan. My office conservatively estimates the project cost would have increased more than $2 million had these bonds been subject to taxation. It’s also estimated that Vermont’s taxpayers have saved at least $85 million in interest costs over the past 10 years on the state’s bonds alone. If you add the 300-plus Vermont cities, towns, school districts, colleges, hospitals and other agencies that also use municipal bonds, the savings are many times greater.
That’s why I am joining with Sens. Leahy and Sanders, Rep. Welch and 41 of my fellow state treasurers from across the political spectrum to oppose any changes to municipal bonds. We know that our states and municipalities cannot afford to lose one of our best tools for a bright financial future.
Vermont state treasurer
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