FRONT ROYAL – Information forwarded to Royal Examiner by local officials indicate good news on the municipal level on several fronts in the newest and approved version of the Republican Tax Bill. Added to the bill are retention of Private Activity Bonds, New Market Tax Credits, as well as Low-Income Housing Credits and Stadium Bonds.
At least two of those – the Private Activity Bonds and New Market Tax Credits – have had major positive impacts on past local municipal capital improvement projects as noted in our initial exploration of the Republican Tax Bill. See related story here.
And while the news is good from a municipal and state economic development standpoint, unanswered questions remain on the broader stage – especially in how adding billions of dollars in federal revenue-supported projects might be balanced on the lost federal revenue side of the bill.
Of course bill sponsors have been silent on short or long-term financial consequences of passage of a bill they have refused to allow public discussion of on either the House or Senate floor. Rather, the focus has been on achieving a solid majority Party vote regardless of a lack of comprehension of what the bill actually says from day to day with reams of handwritten changes in the margins of copies handed to membership prior to committee votes moving the bill forward.
What we do know is that since the municipal bonds and tax credit programs were included, the generally-referenced addition to the federal deficit as a consequence of passage of the tax bill has solidified at about $1.5 trillion, up by about $0.3 trillion.
What is also known and appears not to have changed in any meaningful way in the past seven weeks, is that the great majority of tax cuts will be received by corporations and the upper echelon of U.S. wage earners with seven-figure incomes and above.
But back to that GOOD municipal news.
All of Warren County’s citizens, including its middle and lower-income wage earners, will have less taxes to pay for future capital improvement projects due to the retention of Private Activity Bonds and New Market Tax Credits in the final version of the tax bill – whether or not the federal government has any money with which to offer those financing discounts in the future.
Of the saving of the Private Activity Bonds, Council of Development Finance Agencies (CDFA) President & CEO Toby Rittner said in a release, “This is an enormous win for the development finance industry. Private Activity Bonds are the lifeblood of development finance in the U.S., and the preservation of their tax-exempt status will save cities and states untold millions of dollars.”
Front Royal-Warren County Economic Development Executive Director Jennifer McDonald agreed, telling us in our initial tax bill exploration, “Some of the proposed tax cuts and job acts could be detrimental to the economic development of not just this ccommunity, but the nation as a whole. Economic development relies on some of these very successful programs to create jobs and tax revenue for the community.”
The CD FA had urged its membership to contact federal representatives to preserve economic development tools on the chopping block in order to reduce the trillion-plus dollar deficit the bill creates.
“CDFA wishes to thank our members, partners, legislative team, and all of those that were involved in our efforts to #PreservePABs. This effort would not have been possible without their determination and countless hours of Congressional outreach.”
Of saving the New Market Tax Credits, Warren County Administrator Doug Stanley told Royal Examiner, “We are glad that the New Market Tax Credit program was preserved in the final version of the tax reform bill. As you know, we are proposing to use this as an option for the Ressie Jeffries and Health and Human Services Complex renovations, and the new Rivermont Fire Station.”
However, Stanley bemoaned the loss of another municipal financing tool that did not make the final version of the Republican tax bill – bond Advance Refunding.
“Obviously we are disappointed that the ability to advance refund the bonds that were issued for the RSW Regional Jail will no longer be available. If you remember, Warren County previously refinanced tax-exempt bonds for the schools and saved millions of dollars for our citizens back in 2009 and 2012. Moving forward we will not have the ability to refund them as tax-exempt.”
Don’t be a “Debbie-downer”, Doug – as Monty Python once sang, “Always Look on the Bright Side of Life”.