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Commissioner Blake urges action to protect municipal bond tax exemption, warns of millions in added borrowing costs
Summary
Commissioner Milan Blake told colleagues the proposed federal reduction of the municipal-bond interest tax exemption could raise borrowing costs for Bradley County; he placed a motion on the June 2 agenda to send a letter to the county's federal delegation opposing the change and provided an $18 million bond example to illustrate potential impacts.
Commissioner Milan Blake told fellow commissioners during a May work session that discussions in Washington about limiting or removing the federal tax exemption for municipal-bond interest could impose significant costs on Bradley County borrowers.
Blake, who placed a motion on the June 2 county commission voting-session agenda to request a letter to the county’s federal delegation, said the tax exemption helps lower interest rates on local government borrowing. He provided a hypothetical example: on an $18 million bond issued for infrastructure, raising the market interest rate in response to the loss of the exemption could increase total interest paid by roughly $2.7 million over 20 years.
"Preserving this exemption is not just about financial policy, it's about the future of Bradley County," Blake said in prepared remarks attached to the work session record. He called on commissioners to send the requested letter opposing any federal change that would reduce the tax benefit for municipal bonds.
Why it matters: removing or limiting the tax exemption would raise borrowing costs for counties and municipalities nationwide. Locally, higher interest costs on bond issues can mean higher property taxes, fewer infrastructure projects, or delays to planned work if additional financing cannot be absorbed within current budgets.
Next steps: Commissioner Blake’s motion is scheduled for the June 2 voting session; the commission may vote to send a formal letter to the county’s federal delegation opposing changes to the municipal bond tax exemption.
