HomeMy WebLinkAbout2013-04-11 - Resolution No. 13-05 RESOLUTION NO. 13-05
RESOLUTION OF THE BOARD OF DIRECTORS OF
YORBA LINDA WATER DISTRICT IN SUPPORT OF THE
PRESERVATION OF TAX-EXEMPT FINANCING
WHEREAS, tax-exempt municipal bonds are the primary means by which state and
local governments finance three quarters of the critical infrastructure of our
nation, including roads, bridges, hospitals, schools, and utility systems;
and
WHEREAS, through the tax exemption, the federal government continues to provide
critical support for the federal, state and local partnership that develops
and maintains essential infrastructure, which it cannot practically replicate
by other means; and
WHEREAS, the municipal tax exemption has enabled state and local governments to
finance more than $1.65 trillion in infrastructure investment over the last
decade; and
WHEREAS, this tax exemption is part of a more than century-long system of reciprocal
immunity under which owners of federal bonds are, in turn, not required to
pay state and local income tax on the interest they receive from federal
bonds; and
WHEREAS, municipalities benefit from this tax exemption through substantial savings
on the interest cost of borrowed money; and
WHEREAS, tax exempt bonds benefit state and local governments who need the
support of investors to finance critical infrastructure, taxpayers across the
country who depend on this infrastructure for reliable transportation
systems, schools, public health facilities, energy, clean water and
affordable housing, the federal government, who gets quite a bargain on
their partnership with state and local government to provide the nation's
infrastructure through the exemption; and investors who buy bonds for
many reasons, including the safe nature of these financial products; and
WHEREAS, municipal bonds are the second safest investment, aside from U.S.
Treasuries, with state and local governments having nearly a zero default
rate; and
WHEREAS, 72.4 percent of the total outstanding municipal debt is held by individual
investors, either directly or through mutual funds and money market funds
(Source - 2010 Thomson Reuters); and
WHEREAS, Congress and the President have proposed legislation to reduce or repeal
the tax exemption on municipal bonds; and
Resolution No. 13-05 Support of the Preservation of Tax-Exempt Financing 1
WHEREAS, these proposals to reduce or repeal the tax exemption would have
severely detrimental impacts on national infrastructure development and
the municipal market, raising costs for state and local borrowers and
creating uncertainty for investors; and
WHEREAS, if the proposal to cap the exemption on municipal bonds at 28 percent had
been in place over the last 10 years it would have cost state and local
governments an additional $173 billion in interest costs; and
WHEREAS, total repeal of the exemption over the last decade would have cost state
and local governments over $495 billion in additional interest costs; and
WHEREAS, the municipal tax exemption has a long history of success, having been
maintained through two world wars and the Great Depression, as well as
the recent Great Recession, and it continues to finance the majority of our
nation's infrastructure needs for state and local governments of all sizes
when no other source exists to do so;
NOW, THEREFORE, BE IT RESOLVED, that the Yorba Linda Water District opposes
any efforts by Congress and the White House to reduce or repeal the federal tax
exemption on interest earned from municipal bonds; and;
BE IT FURTHER RESOLVED, that we oppose any action that would reduce or repeal
the exemption on tax-exempt bond interest, and affirm that there should be no
legislative action to apply any changes retroactively to current outstanding bonds; and
BE IT FURTHER RESOLVED, that a copy of this resolution shall be sent to our
Congressional Representative, Ed Royce, and the President of the United States.
PASSED AND ADOPTED this 11th day of April 2013 by the following called vote:
AYES: Directors Beverage, Collett, Hawkins, Kiley and Melton
NOES: None
ABSTAIN: None
ABSENT: None
Gary Melton, President
Yorba Linda Water District
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Resolution No. 13-05 Support of the Preservation of Tax-Exempt Financing 2
ATTEST:
Steven R. Conklin, Secretary
Yorba Linda Water District
Reviewed as to form by General Counsel:
A hur G. Kidman, Esq.
Kidman Law LLP
Resolution No. 13-05 Support of the Preservation of Tax-Exempt Financing 3