HomeMy WebLinkAboutResolution No. 2013-10 1
RESOLUTION NO. 2013-10
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAPE
CANAVERAL, FLORIDA, URGING THE ADMINISTRATION AND
CONGRESS OF THE UNITED STATES TO PRESERVE THE CURRENT
TAX-EXEMPT STATUS OF MUNICIPAL BONDS, AND REJECT ANY
PROPOSAL THAT WOULD REDUCE OR ELIMINATE THE FEDERAL
TAX EXEMPTION ON INTEREST EARNED FROM TAX-EXEMPT
MUNICIPAL BONDS; PROVIDING FOR THE REPEAL OF PRIOR
INCONSISTENT RESOLUTIONS; SEVERABILITY; AND AN
EFFECTIVE DATE.
WHEREAS, several proposals are being discussed in the ongoing Federal budget
negotiations that would either reduce or eliminate the current tax exemption on the interest
earned from tax-exempt municipal bonds; and
WHEREAS, the United States House of Representatives Ways and Means Committee is
considering various changes to Federal tax provisions on reducing or eliminating the current tax
exemption on the interest earned from tax-exempt municipal bonds, along with the ability of
individual taxpayers who itemize to deduct their State and local income and property taxes when
filing their Federal tax return and other tax related issues; and
WHEREAS, for state and local governments, tax-exempt municipal bonds are the most
important tool available for financing critical infrastructure projects such as primary and
secondary schools, hospitals, water and sewer systems, roads, highways and streets, public
power facilities,mass transit projects, airports, solid waste, sanitation and recycling, multi-family
housing, police and fire stations and equipment, bridges, tunnels and other infrastructure
projects; and
WHEREAS, together, state and local governments are responsible for building and
maintaining 75 percent of the nation's infrastructure, which is financed mostly by tax-exempt
municipal bonds; and
WHEREAS, on average, state and local governments save up to two percentage points
on their borrowing rates through use of tax-exempt municipal bonds; and
WHEREAS, these savings allow state and local governments to invest more in critical
infrastructure and essential services while holding down the cost to taxpayers; and
WHEREAS, approximately $3.7 trillion in tax-exempt municipal bonds are currently
outstanding; and
WHEREAS, the U.S. Conference of Mayors, the National League of Cities, and the
National Association of Counties, with assistance from the Government Finance Officers
Association, issued a joint report (the "Report") in February 2013 titled "Protecting Bonds to
1
Save Infrastructure and Jobs 2013" to determine the impact of the proposals to limit (by
imposing a 28% cap) or fully eliminate the exemption on interest from municipal bonds; and
WHEREAS, the Report shows that state and local governments issued 57,754 tax-
exempt bonds for more than $1.65 trillion of infrastructure investment over the last decade, with
{ over 6,600 tax-exempt bonds financing over$173 billion in infrastructure projects in 2012 alone;
and
^4° WHEREAS, of those totals, 1,250 tax exempt state and local tax-exempt bonds
financing over $103 billion in infrastructure improvements were issued over the last decade in
the State of Florida; and
WHEREAS, the Report shows that if the 28% cap on interest earned from tax-exempt
municipal bonds was in effect over the last decade, it would have cost state and local
governments an additional $173 billion in interest expense over the last decade; and
WHEREAS, the Report shows that if the tax-exemption had been fully eliminated, it
would have cost state and local governments an additional $495 billion in interest expense over
the last decade; and
WHEREAS, while on first appearance it might seem that the 28 percent cap on interest
earned from tax-exempt bonds may only affect high-income taxpayers, in effect the increased
cost would be borne almost exclusively by state and local governments, and therefore all
taxpayers within those respective jurisdictions, in the form of higher interest rates on their
borrowing; and
WHEREAS, it is being proposed that the 28 percent cap be applied retroactively,
meaning that it would be applied to all tax-exempt bonds already outstanding in addition to
bonds issued in the future, and in the nearly 200 year history of the tax-exemption Congress has
never applied a retroactive tax to bonds already held by investors; and
WHEREAS, this would hurt middle-class taxpayers as state and local governments
would be forced to increase property and sales taxes on local taxpayers to offset higher
borrowing rates on infrastructure investments; and
WHEREAS, if state and local governments choose not to increase property and sales
taxes on local taxpayers to offset higher borrowing rates on infrastructure investments, the
alternate option would be to decrease investment in infrastructure, negatively impacting jobs and
resulting in needed infrastructure improvements being postponed and resulting in a more
deteriorated infrastructure base; and
The City of Cape Canaveral
Resolution No 2013-10
Page 2 of 4
WHEREAS, 2010 IRS data show that 57 percent of municipal bond interest is paid to
individuals 65 years of age and older who largely live on fixed incomes, and 52 percent of
municipal bond interest is paid to individuals who earn less than $250,000 annually; and
WHEREAS, the Federal government should not adversely effect, by limiting or
providing obstacles to needed infrastructure financing, the right of state and local governments to
borrow and decide what infrastructure and services to provide to their citizens.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cape
Canaveral, Florida:
Section 1: The foregoing recitals contained in the preamble to this Resolution are incorporated
by reference herein.
Section 2: The Cape Canaveral City Council urges the Administration and Congress of the
United States to preserve the current tax-exempt status of municipal bonds which has
successfully provided trillions of dollars in low-cost financing for critical infrastructure
investments that serve citizens in all states and local communities.
Section 3: The Cape Canaveral City Council urges the Administration and Congress of the
United States to reject any proposal that would reduce or eliminate the federal tax exemption on
interest earned from tax-exempt municipal bonds.
Section 4: The City Clerk is directed to distribute this Resolution to the President of the United
States, the Florida members of the Senate and House of Representatives of the United States, the
Florida League of Cities, the Florida Association of Counties, the Florida City County
Management Association, the Board of County Commissioners for Brevard County, the Space
Coast League of Cities, and each of the municipalities in Brevard County.
Section 5: This Resolution shall take effect upon its adoption.
ADOPTED by the City Council of the City of Cape Canaveral, Florida, this 21st day
of May 2013.
(Signature page follows)
The City of Cape Canaveral
Resolution No 2013-10
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PA L.. Jo Bond, AYOR PRO TEM
ATTEST:
' a` Name For Against
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Angela . Apperson, •' .'. City Manager/ John Bond X
City Clerk
Robert Hoog Motion
Buzz Petsos Absent
Approved as to Form:
Rocky Randels Ahaent
Betty Walsh Second
Anthony A. Garganese, City Attorney
The City of Cape Canaveral
Resolution No. 2013-10
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