Localities Should Focus on Threat to Tax-Exemption, Pension Reform, Pros Say

State and local governments will need to muster attention on the federal threat to tax-exemption and should seize upon the sea change of public support to tackle tough issues like retirement benefit cuts afforded by the fiscal struggles of recent years. The “threat to tax-exemption is the greatest it’s been since 1986” and comes from both sides of the political aisle, said George Friedlander, senior municipal strategist at Citi, during a discussion on the subject of market regulation and oversight. The threats are posed in the form of changes being floated to market access for 501(c)(3) organizations and private-activity bonds, debate over replacing tax-exempt bonds with tax-credit borrowing and from President Obama’s proposal in his fiscal 2013 budget to place a 28% cap on the value of tax-exempt interest to reduce the deficit by $584 billion over 10 years.

Bond Buyer

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