From the summary:
State and local governments would have paid $714 billion in additional interest expenses from 2000 to 2014 without tax-exempt municipal bonds, according to a new report issued by ICMA and the Government Finance Officers Association.
Other key findings from ICMA’s new public policy white paper “Municipal Bonds and Infrastructure Development – Past Present and Future,” prepared by Justin Marlowe of the University of Washington on behalf of the Government Affairs and Policy Committee, include:
– Virtually all state and local government capital investment is financed through municipal bonds.
– In 2014, state and local governments invested nearly $400 billion in capital projects, a significant slowdown in spending. Total state and local capital spending has not yet returned to pre-Great Recession totals.
– Approximately 90 percent of state and local capital spending is financed by debt.
– Alternative financing methods, such as pay-as-you-go and public-private partnerships, are effective for some types of capital projects, but are not a robust alternative to traditional, tax-exempt municipal bonds
– There are more than one million municipal bonds in the market today, issued by more than 50,000 units of government, and their total par value is just over $3.6 trillion.
– If the federal tax exemption for municipal bonds were repealed, state and local governments would have paid $714 billion in additional interest expenses from 2000 to 2014. For a typical bond issue, this would mean $80-$210 in additional interest expenses per $1,000 of borrowed money….