Bradley County officials oppose Congress on municipal bond tax exemption changes

Bradley County officials are sounding the alarm over potential changes to municipal bond tax exemptions that could significantly impact local infrastructure projects. During a recent County Commission Work Session, leaders emphasized the critical role these tax-exempt bonds play in funding essential services like roads, schools, and emergency services.

Currently, when investors purchase municipal bonds, they do not pay federal income taxes on the interest earned. This exemption allows local governments to secure lower interest rates, making it more affordable to borrow money for vital projects. However, discussions in Washington, D.C. about limiting or eliminating this exemption could shift the financial burden back to local communities, leading to higher costs for infrastructure improvements.

One official highlighted the potential consequences of such a policy change, stating, “If these exemptions are reduced or eliminated, investors will demand higher rates to compensate for the lost tax benefits.” This could result in increased borrowing costs, stretching budgets and potentially leading to delayed projects and higher taxes—outcomes that no one wants.

To illustrate the stakes, the official provided a scenario based on a recent $18 million bond issued for the Price Center. If the tax exemption were removed, the county could face an additional $2.7 million in interest over 20 years, forcing tough decisions on project timelines, particularly for school upgrades.

In response to these concerns, the commission plans to draft a formal letter to federal legislators, urging them to consider the local impact of their decisions. “It is essential that they understand how this policy change affects our community,” the official stated. The letter will be included in the agenda for the next voting session, ensuring that Bradley County's voice is heard in the ongoing discussions in Washington.