Connecting state and local government leaders

State Treasurers Will Help Advise a U.S. House Intergovernmental Task Force

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Connecting state and local government leaders

Maintaining the tax exemption for municipal bonds is at the top of the National Association of State Treasurers’ agenda on Capitol Hill.

WASHINGTON — State treasurers will get a chance to weigh in as a U.S. House task force on intergovernmental affairs continues its work.

The National Association of State Treasurers will join an advisory council to the Speaker’s Task Force on Intergovernmental Affairs, the association’s president, Ken Miller, who is also Oklahoma’s treasurer, said Wednesday. “NAST really does welcome the opportunity,” Miller added. Other state and local government groups were previously appointed to the council.

House Speaker Paul Ryan and House Minority Leader Nancy Pelosi announced the formation of the task force earlier this year. The panel of House lawmakers met for the first time in June. Its members include seven Republicans and six Democrats.

Preserving the tax exempt status for municipal bonds is a key topic that the state treasurers plan to raise in their discussions with the task force, according to Miller. “That’s really the issue that NAST has been most interested in at that federal level,” he told Route Fifty by phone.

But Miller stressed there will be topics other than the municipal bond tax break on NAST’s radar as the group works with the panel of lawmakers.

One example he mentioned are so-called “529 plans,” which receive favorable federal tax treatment and are designed to encourage people to save for future college expenses. Another is addressing the heavy public worker pension costs that some states and localities are grappling with. NAST is interested in bank regulations and financial literacy initiatives as well, Miller said.

Many state and local leaders are concerned that the federal income tax exemption for interest earned on municipal bonds could get eliminated or scaled back as part of broader efforts in Congress expected in the coming months to overhaul the U.S. tax code.

"At this point there's no guarantees that it will or it won't be on the table," Miller said of the exemption.

Backers of the “muni” bond tax break say that it keeps borrowing costs down for states and localities, helping them to finance infrastructure like highways and transit projects. Critics commonly say the exemption costs the federal government money in foregone tax revenue.

U.S. Rep. Rob Bishop, a Utah Republican, is chairing the intergovernmental affairs task force. He told Route Fifty after the group’s first meeting that he’d like the group to focus on procedures that might give states and localities more say in decision-making processes.

Bishop also emphasized that he does not want to group’s work to get bogged down in discussions about budget issues. “This task force has to talk about procedures, so that future decisions are made locally and at the state level,” he said after the June meeting.

Other state and local organizations that are advising the task force include: the National Governors Association; the National Association of Counties; the National League of Cities; the Council of State Governments; the National Conference of State Legislatures; the U.S. Conference of Mayors; and the International City / County Management Association.

Bishop’s office did not immediately respond to an inquiry on Wednesday about when the task force would next meet and how its work is progressing.

Bill Lucia is a Senior Reporter for Government Executive’s Route Fifty and is based in Washington, D.C.

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