Vice President Weaver introduced a discussion on federal policy advocacy,
specifically regarding proposed changes to the tax-exempt status of
municipal bonds. He referenced a document from the U.S. House Ways and
Means Committee that was shared by Councilmember Schnetzer, which
outlined approximately 50 pages of proposed policy items, including one that
would remove the tax exemption on interest earned for municipal bonds.
Weaver and Schnetzer followed up on this issue by meeting with MORPC’s
Director of Government Affairs to explore advocacy efforts against the
proposed removal of this exemption. Weaver noted that Schnetzer conducted
an analysis estimating that if the exemption were removed at the time the city
issued bonds for the 825 Tech Center Drive project, the increased interest
rates would have resulted in an additional $15.5 million in costs over the life of
the loan. He invited the Council to consider how they would like to engage in
advocacy on this issue, particularly given the many anticipated changes at the
federal level with the new Congress and administration.
Councilmember Schnetzer provided additional context, explaining that the
issue stemmed from the Tax Cuts and Jobs Act (TCJA) of 2017, which
enacted tax cuts that are set to expire on December 31, 2025. Without
Congressional action, most individuals would see a tax increase, and
Congress is now exploring options to extend those tax cuts. To extend the tax
cuts, Congress is expected to use a reconciliation process, which allows
passage of budget-related legislation with a simple majority, bypassing the
filibuster. However, the process requires that each provision be analyzed for
its impact on the federal deficit. Extending the existing tax cuts for another ten
years is projected to increase the deficit by approximately $4.5 trillion. On
January 17, 2025, the House Ways and Means Committee released a
51-page document with over 100 proposed revenue-generating measures to
offset the deficit increase. Among them was the proposal to remove the
tax-exempt status of municipal bonds. The Congressional Budget Office
(CBO) scored this change at $250 billion in additional federal revenue over a
ten-year period, while municipal advocacy groups estimate that the cost to
state and local governments could reach $800 billion over the same period.
Schnetzer explained that municipal bonds are critical for funding large capital
projects at the local and state level. Just as individuals typically finance
long-term assets like homes through mortgages, local governments use
bonds to fund projects such as city halls, police headquarters, and
infrastructure improvements. He reiterated that when Gahanna issued $64
million in bonds for 825 Tech Center Drive, the tax exemption kept interest
rates lower. Had the bonds been taxable, the city would have incurred an
additional $15.5 million in costs over a 27-year period. While the proposed
change would not impact existing municipal bonds, Schnetzer stressed that
future projects would be significantly more expensive to finance, creating
financial pressures on local budgets. He emphasized that this is the primary
concern and reason for potential advocacy efforts. Schnetzer concluded by
turning the discussion back to Vice President Weaver, asking if Council would
like to take action to ensure that Congress understands how removing the
municipal bond tax exemption would negatively impact Gahanna and other
local governments.
Vice President Trenton Weaver provided an update on advocacy efforts
following discussions with Joe Garrity, Government Affairs Director at the
Mid-Ohio Regional Planning Commission (MORPC). Garrity recommended
that the city reach out to the Ohio Municipal League (OML) and collaborate