In addition to representing municipal interests on state legislation, CML is active at the federal level, and has outlined a set of legislative priorities.
CML also is a founding member of the National League of Cities. To view the National League of Cities legislative agenda, click here.
On December 22, 2017, President Donald Trump signed H.R. 1, the Tax Cuts and Jobs Act, into law.
Routefifty.com provides a rundown of some of the major provisions that have implications for state and local governments.
State and Local Tax (SALT) Deduction
The Tax Cuts and Jobs Act caps the deductions for state and local income, sales, and property taxes at $10,000. In addition to hurting municipalities, these changes will negatively impact Title 32 special districts, counties, and school districts.
For an explainer on SALT, and on the consequences of eliminating it, please watch this short video produced by Rockefeller Institute of Government.
Following Representative Tom MacArthur's (R-N.J.) November 18 remarks that the $10,000 cap will still allow nearly every taxpayer in his district to fully take advantage of the property tax deduction, The Washington Post analyzed the likely effects of the reform on taxpayers within different brackets, ultimately awarding Rep. MacArthur Two Pinocchios for his claim.
The Historic Preservation Tax Credit, which encourages the redevelopment of historic and abandoned buildings, is modified by the bill.
Protect Municipal Bonds
The federal income tax exemption on municipal bonds benefits all Americans by incentivizing private individuals, mutual funds, and financial institutions to purchase the bonds, even with a lower interest rate. The lower interest rate in turn saves local governments an average of 25 to 30 percent on interest costs, allowing more funds to be directed toward critically important public infrastructure projects. CML commends Representatives Mike Coffman and Scott Tipton for being two of the 156 co-signers in a letter to the ranking members of the Ways & Means Committee supporting continued protection of municipal bonds.
The Tax Cuts & Jobs Act does not alter the current tax exemption for municipal bonds or private activity bonds (PABs). PABs provide financing for important qualified projects and programs, such as affordable housing, economic development, hospitals, educational and cultural facilities, and much more.
The bill eliminates the exemption for future advance refunding bonds, which are used by state and local governments to refinance debt and therefore save on borrowing costs.
Though the final tax bill has only one change to the municipal bond market, the elimination of the tax exemption for advance refunding bonds, market experts warn that it has the potential to radically transform the market, leading to lower demand for municipal bonds, greater volatility in the market, and costly alternative options to advance refundings.
CML remains committed to protecting the interest of its member municipalities and thanks local elected officials across the state for reaching out to the Colorado Congressional delegation, as well as municipal leagues across the country and the National League of Cities for their advocacy work protecting municipal interests.
Please see this article by The Denver Post for more information about how the proposed legislation will impact Colorado municipalities, individuals, and business owners.
Other Federal Issues Impacting Municipalities: Close the Online Sales Tax Loophole
For a clear understanding of the reasons it is necessary to close the online sales tax loophole, please read this guest post by Lisa Soronen, State and Local Legal Center executive director, on the Municipalities Matter blog.
National League of Cities also provides a brief explainer on the harm this loophole causes to municipalities, including our members. Over the past several years, members of Congress have introduced versions of a Marketplace Fairness Act, and CML will continue to support this legislation.
Colorado's Congressional delegation
Sen. Michael Bennett
Sen. Cory Gardner
Rep. Diana DeGette (1st District)
Rep. Jared Polis (2nd District)
Rep. Scott Tipton (3rd District)
Rep. Ken Buck (4th District)
Rep. Doug Lamborn (5th District)
Rep. Mike Coffman (6th District)
Rep. Ed Perlmutter (7th District)
Federal Relations Update is an electronic publication of the National League of Cities.