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Commissioner warns federal change to municipal-bond tax exemption could raise Bradley County borrowing costs
Summary
Commissioner Milan Blake told the Bradley County Commission that a proposed federal limit on the tax exemption for municipal-bond interest could increase interest rates on county borrowing, citing an $18 million example that could cost the county about $2.7 million more over 20 years; Blake put a motion on the June 2 agenda to ask the county's federal delegation to oppose the change.
Milan Blake, a Bradley County commissioner, told colleagues at the May 27 work session that federal proposals to limit or eliminate the federal tax exemption for municipal-bond interest would raise borrowing costs for the county and could lead to higher local taxes, fewer infrastructure projects, or delays in services.
Blake said the exemption currently lets investors accept lower interest rates on municipal debt because the interest is not subject to federal income tax. He read an attachment into the record that used a past $18 million bond as an example to show the scale of the impact.
The county's example assumed a 20-year bond: at a 3% interest rate (with the current exemption), total interest would amount to approximately $5.4 million; if investors demanded 4.5% because the exemption were removed, interest would rise to about $8.1 million, an additional $2.7 million over 20 years, according to the attachment Blake presented. Blake framed those numbers as a tangible way the change could constrain local budgets.
Blake placed a motion on the June 2, 2025 Voting Session agenda asking the commission to send a letter to Bradley County's federal legislative delegation opposing restrictions to the municipal-bond tax exemption. The work session did not vote on the motion; the item is scheduled for the June 2 voting session.
The matter concerns federal tax policy; no federal statute or specific legislative text was cited at the work session. The commission's next step is the June 2 voting session, where Blake's motion will be considered.
