Loading...
HomeMy Public PortalAbout2013.046 (04-02-13)RESOLUTION NO. 2013.046 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD PROCLAIMING FORMAL SUPPORT OF THE PROTECTION OF MUNICIPAL BONDS IN FEDERAL LEGISLATION WHEREAS, tax - exempt municipal bonds are the primary means by which state and local governments finance three quarters of the critical infrastructure of our nation, including roads, bridges, schools, and utility systems; and WHEREAS; through the tax exemption, the federal government continues to provide critical support for the federal, state and local partnership that develops and maintains essential infrastructure, which it cannot practically replicate by other means; and WHEREAS, the municipal tax exemption has enabled state and local governments to finance more than $1.65 trillion in infrastructure investment over the last decade; and WHEREAS, this tax exemption is part of a more than century-long system of reciprocal immunity under which owners of federal bonds are, in turn, not required to pay state and local income tax on the interest they receive from federal bonds; and WHEREAS, municipalities benefit from this tax exemption through substantial savings on the interest cost of borrowed money; and WHEREAS, tax exempt bonds benefit state and local governments who need the support of investors to finance critical infrastructure, taxpayers across the country who depend on this. infrastructure for reliable transportation systems, schools, public health facilities, energy, clean water and affordable housing, the federal government, who gets quite a bargain on their partnerships with state and local government to provide the nation's infrastructure through exemption; and investors who buy bonds for many reasons, including the safe nature of these financial products; and WHEREAS, municipal bonds are the second safest investment, aside from U.S. Treasuries, with state and local governments having nearly a zero default rate; and WHEREAS, 72.4 percent of the total outstanding municipal debt is held by individual investors, either directly or through mutual funds and money market funds; and WHEREAS, Congress and the President have proposed legislations to reduce or repeal the tax exemption on municipal bonds; and WHEREAS, these proposals to reduce or repeal the tax.,exemption would have severely detrimental impacts on national infrastructure development and the municipal' market, raising costs for state and local borrowers and creating uncertainty for investors; and WHEREAS, if the proposal to cap the exemption on municipal bonds at 28 percent had been in place over the last 10 years it would have cost state and local' government an additional $173 billion in interest costs; and' WHEREAS, total repeal of the exemption over the last decade would have cost state and local governments over $495 billion in additional interest costs; and WHEREAS, the municipal tax exemption has a long history.-of success, having been maintained through two world wars and the Great Depression, as well as the recent Great Recession, and it continues to finance the majority of our nation's infrastructure needs for state and local governments of:all sizes- when no other source exists to do so. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LYNWOOD HEREBY RESOLVES AS FOLLOWS: Section 1. The City of Lynwood opposes any efforts_ by. Congress. and the White House to reduce or repeal the federal tax exemption on interest earned from municipal bonds. Section 2. The City of Lynwood - opposes any action that would reduce or repeal the exemption on tax - exempt bond interest, and affirm that should be no legislative action to apply any changes retroactively to current outstanding bonds. Section 3. By adoption of this resolution, the City .of. Lynwood proclaims its formal support for protection of municipal bonds. Section 4. The City Council authorizes the City Manager, staff and /or any advocacy organization or contracted' lobbyist to communicate the City's position advocate, and support for protection of municipal bonds. Section 5. This Resolution shall be effective immediately upon its adoption. Section 6. The City Clerk shall certify as to the adoption of this City Council Resolution and send a copy of this Resolution to the City of of Congressional Representatives and key members of Administration. PASSED, APPROVED and ADOPTED this 2 nd day of April, 2013. Salvador Alatorre, Mayor ATTEST: 6 Mafia Quinonez, City Clerk Roger 9 Manager APPROVED AS TO FORM: Fred Galante, City Attorney TO CONTENT: Roberson, Director Finance STATE OF CALIFORNIA ) ) SS. COUNTY OF LOS ANGELES ) I, the undersigned, City Clerk of the City of Lynwood, do hereby certify that the foregoing 'Resolution was passed and adopted by the City. Council of the City of Lynwood at a regular meeting held on the 2 " day of April, 2013. AYES: COUNCIL MEMBERS CASTRO, SANTILLAN- BEAS,_MORTON, RODRIGUEZ AND ALATORRE NOES: NONE ABSENT: NONE ABSTAIN: NONE O /lam /_�ffi P� STATE OF CALIFORNIA ) ) SS. COUNTY OF LOS ANGELES ) I, the undersigned, City Clerk of the City of Lynwood, and the Clerk of the City Council of said City, do hereby certify that the above foregoing is a full, true and correct copy of Resolution No. 2013.046 on file in my office and that said Resolution was adopted on the date and by the vote therein stated. Dated this 2 " day of April; 2013.