Sample op-ed in support of tax-exempt financing during Public Power Week 2015
[Name of utility] will be celebrating Public Power Week Oct. 4-10. Public Power Week is an annual
national celebration to recognize the contribution that not-for-profit, community owned electric utilities
make to the economy and their customers’ well-being by providing clean, reliable, safe, and affordable
power.
[Name of utility] and other public power utilities throughout the country issue nearly $12 billion in
municipal bonds every year to finance the capital projects necessary to meet these goals: power plants
and power plant upgrades, substations, transmission and distribution lines, smart grid equipment,
[optional insert example of project funded by bond issuance]. These projects make sure that the lights
turn on.
However, money is tight in Washington, and some policymakers in Congress and the White House want
to impose an unprecedented tax on municipal bonds to pay for more federal spending, deficit reduction,
and income tax rate cuts. Investors hit by this new tax would demand a higher interest rate on newly
issued bonds, driving up financing costs for our community. [Name of utility] would have two options —
either raise electric rates on our customers or forgo system improvements. We don’t think either is
acceptable.
ADDITIONAL MATERIAL FOR LONGER OP-ED
Some try to justify this tax by arguing that it would only hurt wealthy investors. First, half of all bond
interest is paid to households with incomes less than $250,000 — and three-quarters of bond interest is
paid to households with income of less than $1 million. A default rate approaching zero and predictable,
steady payments to bondholders make municipal bonds an important investment option for fixedincome households. Nearly three-fifths of bond interest is paid to investors age 65 or older.
Second, as discussed above, investors will be compensated for the new tax with higher interest rates,
meaning the real cost of the tax will be passed through to state and local residents and here in [city
name] by our customers.
Since the tax codes’ inception, state and local bonds have been exempt from federal tax, just as federal
bonds — and federal property — are exempt from state and local taxes. Under this system of “reciprocal
immunity,” nearly three-quarters of the nation’s core infrastructure has been built with municipal
bonds. With every bond issue approved by voters or locally elected officials, state and local
governments have used this tool responsibly. State and local borrowing has actually declined in the last
decade, compared to federal debt, which has more than doubled.
END ADDITIONAL MATERIALS
We believe the best course for [Name of utility’s] customers, and our community is to leave the current
exclusion for municipal bonds interest in place, and we urge all who would be affected to contact the
White House and their congressional delegation to say the same.