House and Senate Conferees on the Tax Cuts and Jobs Act (H.R. 1) have reached an agreement that would retain the current-law tax exemption for municipal bonds, but prohibit the issuance of tax-exempt advance refunding bonds and tax credit bonds after Dec. 31, 2017.
The ability to currently refund outstanding debt would not be affected.
The House and Senate are expected to take up and pass the agreement this week and, if passed, President Trump is expected to sign the bill into law.
Retaining the tax exemption for municipal bonds has been the American Public Power Association’s top legislative priority.
Retention of the tax exemption for municipal bonds will save public power utilities, as well as their customers, billions of dollars annually.
The Association strongly opposed the repeal of advance refunding bonds.
About half of all refunding bonds issued by public power utilities in the last five years were advance refunding bonds, with net present value savings of at least $600 million.
A repeal would preclude such savings in the future or forces public power utilities into complicated swap transactions to take advantage of interest rate changes if sought more than 90 days in advance of redemption.
Reposted with permission from Public Power Daily