Tax-Cut Bill Would End Bonds Used for Private Infrastructure Investment

The federal tax-cut bill released this week includes a provision to halt the sale of private-activity bonds used to fund public infrastructure projects like sports stadiums, bridges, toll roads and airports. The move would be at odds with President Donald Trump’s push to increase private funding for public works, Bloomberg reported.

As P3 Kentucky Roundtable member Jackson Kelly PLLC wrote earlier this year, the president’s proposed budget called for expanding the Transportation Department’s PAB program, which allows the DOT to allocate authority to issue tax-exempt bonds on behalf of private entities constructing highway and freight transfer facilities.

For example, the investors in Louisville’s Ohio River Bridges Project financed more than half the cost of the new Lewis and Clark Bridge using PABs, according to the U.S. Transportation Department.

According to Bloomberg, the rollback of PABs would increase costs for companies that finance public works by issuing low-interest, tax-exempt bonds.

“To be clear, the elimination of private activity bonds is bad policy and will cripple economic, infrastructure, and community development,” Toby Rittner, president of the Council for Development Finance Agencies, wrote to members late Thursday. “CDFA is asking for your support in our efforts to remove this provision from the bill. CDFA will be sending letters to House and Senate leaders highlighting the importance of private activity bonds, and we ask for your support by signing on to our efforts.”

Robert Poole, director of transportation policy at the Reason Foundation, told Bloomberg: “This would be completely at odds with getting more private investment in infrastructure.”

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