by Celia Llopis-Jepsen, Kansas News Service
Local governments and school boards are worried about the possible effects on infrastructure and other projects if Congress passes a tax bill that eliminates exemptions for certain refinancing of bonds.
The Kansas Association of School Boards, which includes most of the state’s 286 boards of education, is urging its members to contact Sens. Jerry Moran and Pat Roberts — both Kansas Republicans — about voting against the bill.
And the League of Kansas Municipalities, which represents more than 500 town and city governments, wrote to Congress earlier this month with the National League of Cities and similar associations in 25 other states calling the potential bond refunding changes “a direct hit” to city budgets.
The changes would eliminate “a tool for responding to a sharp economic downturn because the lower interest rates that make an advance refunding feasible and attractive are typically sparked by a broader slowdown in the economy,” the letter said. “In that scenario, municipalities will lose economically-sensitive revenues like sales taxes, so the ability to manage otherwise fixed costs like the debt service bill is particularly valuable.”
Leah Fliter of the Kansas Association of School Boards said advance bond refunding is “not unlike refinancing your mortgage.”
The association encouraged members to reach out to Roberts and Moran through social media. The bill “siphons money from public education,” according to the association.
Michael Byerly, a spokesman for Congresswoman Lynn Jenkins, a Kansas Republican who voted in favor of the House’s version of the tax bill, said “the ultimate goal of tax reform is to eliminate as many loopholes as possible, bring down tax rates for all American families and get our economy on the right fiscal track.”
Byerly said the bill is “far from becoming law” and that Jenkins had heard concerns about the bond matter from cities and other potentially affected entities.
“Congresswoman Jenkins will continue to work to improve the bill and debate this provision with her colleagues as the legislative process continues,” he said.
A spokesman for Moran didn’t specify the senator’s stance on the bond financing exemption but said he “is determined to pass tax reform, and the Senator continues to work with his colleagues to accomplish that.”
Other members of Kansas’ congressional delegation didn’t respond for request for comment.
Melissa Wangemann, general counsel for the Kansas Association of Counties, said counties also use bonding to help build roads or carry out other infrastructure projects.
The bond-related tax exemption “obviously keeps the cost lower and makes it a more attractive financing tool.”
Both the Kansas Association of Counties and the National Association of Counties have notified their members about the potential effects of the changes. The groups said the type of refunding in question saved taxpayers at least $3 billion last year.
As the Senate moves toward a tax bill vote — the House has already passed its version — other potential changes worry concern government officials in Kansas and elsewhere. That includes the possibility Congress will rein in federal deductions for state and local taxes.
Celia Llopis-Jepsen is a reporter for the Kansas News Service, a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio covering health, education and politics. You can reach her on Twitter @Celia_LJ. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.
See more at http://kcur.org/post/kansas-municipal-school-board-groups-oppose-bond-financing-changes-tax-bill.