4 April 2018

Increased Costs of Municipal Financing

Unintended Consequences of the Tax Cuts and Jobs Act

As you know, both corporate and individual tax rates were reduced in last year’s Tax Cuts and Jobs Act.  Lower tax rates make tax-exempt vehicles like municipal bonds less attractive to both corporate and individual investors; with lower tax rates, they have less incentive to look for tax-exempt investments.  Reduced demand for municipal bonds and other tax-exempt investment vehicles like private activity bonds (PABs) means that cities will have to increase the interest rates on new bond issues in order to attract investors.

On top of that, the new cap on the state and local tax deduction will make it harder for municipalities to raise taxes to pay for new infrastructure projects or smart city improvements.  Every state and/or local tax increase will be more expensive as taxpayers are limited on how much they can deduct from their federal taxes: every dollar over $10,000 will be taxed twice.

Not only will this increase costs for municipal governments, it will make it more difficult and more costly to finance the $1 trillion in private investment that the Trump Administration is advocating for in its infrastructure proposal. 

TFG will continue to monitor that debate and advocate for ways to reduce those financing costs.  Please reach out to our team for more information.

Blog TopicInfo
Print
«April 2025»
MonTueWedThuFriSatSun
31123456
78910111213
14151617181920
21222324252627
2829301234
567891011

US Congressional Calendar

9 December 2024

TFG Presents 2025 Congressional Calendar

The Ferguson Group (TFG) compiled a 2025 Congressional Calendar with session and recess dates for the U.S. House of Representatives and U.S. Senate 119th congressional session. 

Latest TFG News

28 January 2025

TFG Monitoring Developments of Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs

On January 27, the Office of Management and Budget (OMB) under President Trump issued a memorandum titled “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs.” The directive mandates Federal agencies to temporarily suspend the obligation and disbursement of federal financial assistance while conducting a comprehensive review of programs and awards to ensure alignment with the administration’s policies and priorities. As part of this review, agencies are also instructed to temporarily suspend the issuance of new program solicitations.

Meet a Team Member

Wyatt Fritz

Wyatt Fritz

Grants Analyst

Latest Coronavirus Updates