Muni bond advocate Rep. Rudy Yakym: maintain your foot on the gasoline

Rep. Rudy Yakym’s workplace

Municipal market members, recent off a profitable lobbying effort to persuade Congress to protect the muni bond tax exemption, ought to maintain the momentum going as lawmakers doubtlessly sort out a brand new tax bundle subsequent yr.

That is the message Rep. Rudy Yakym, R-Ind., delivered to bond-issuing cities and states in remarks Tuesday that opened the Authorities Finance Officers Affiliation’s seventh annual “Mini Muni” three-day digital convention.

“You simply by no means know. We may have one other tax invoice, one other reconciliation invoice, later this yr or subsequent yr,” Yakym mentioned. “I would not take your foot off the gasoline,” he mentioned. “It is actually necessary that you just proceed to teach folks and remind them, early and sometimes, why it is necessary that we keep [tax-exempt bonds] going ahead.”

Yakym is co-chair of the Home Municipal Finance Caucus with Democrat Rep. Terri Sewell, R-Ala. Each sit on the highly effective Home Methods and Means Committee. Earlier than becoming a member of Congress in 2022, Yakym served on the board of the Indiana Finance Authority, the place he mentioned he realized the ins-and-outs of public finance from long-time director Dan Enormous.

The likelihood that Republicans may terminate the tax-exemption on municipal bonds turned clear in January, when a Home doc named the financing software as considered one of a listing of potential “pay fors” to cowl the price of what turned the One Huge Stunning Act invoice, Yakym recalled.

“For me that was a reasonably vivid crimson line,” he mentioned. “We articulated that very clearly to the committee; that may be an enormous downside for us within the Hoosier state.”

Throughout the next months-long OBBBA negotiations, Yakym mentioned he would head into Methods and Means conferences “with a really thick, three-ring binder coping with each subject that mattered to Hoosiers. The only greatest part of that binder handled municipal bonds and the optimistic affect they’ve throughout the nation,” he mentioned. “We actually spent a variety of time getting ready to have discussions on why we didn’t wish to have to make use of [muni bonds] as a pay-for.”

Saving the tax exemption “by no means would have occurred” with out the lobbying effort by the GFOA, its members and different public finance gamers to teach members of Congress, he mentioned.

Whereas persevering with to teach lawmakers concerning the significance of bonds, the market also needs to push to revive tax-exempt advance refunding, the Indiana congressman mentioned. Congress completely killed advance refunding in 2017 as a part of the Tax Cuts and Jobs Act, and subsequent payments to revive it have failed to achieve traction.

“It is extra necessary now than previous three years or so,” he mentioned. “Now that we’re in a falling [interest] charge setting, there are a selection of entities that wish to do refinancings at decrease rates of interest. So getting this subject mounted goes to be crucial going ahead.”

The crush of payments launched in a typical Congressional session — there have been 10,000 launched through the earlier 118th session — signifies that most members aren’t in a position to evaluate all of them, Yakym mentioned, so highlighting the laws that issues to public finance could be fruitful.

“When folks such as you go to with us … or ship us a textual content message … that units off a complete course of in my and different members’ workplaces,” he mentioned. “Your advocacy actually does matter in this stuff and I might encourage you to maintain it going.”