Aurora resolution aims to protect tax-free bonds from potential federal cuts

AURORA | The Aurora City Council approved a resolution Monday night hoping to persuade Congress and the Trump administration to preserve the federal tax exemption of municipal bonds. 

“A little context or background, some in the presidential administration have floated the idea of removing the tax-exempt status of municipal bonds to help pay for their tax package, and that obviously would be very detrimental to the City of Aurora and all other municipalities as well,” Councilmember Curtis Gardner said during a May 5 study session. 

Municipal bonds are essentially loans from a wide range of investors offered at less-than-market rates because repayment is relatively secure, and interest made on the loans are tax free.

The bonds are key tools for financing city infrastructure such as roads, utilities, all kinds of buildings and even hospitals.

“This is an issue that the National League of Cities, Colorado Municipal League and other municipal groups have been working on,” Gardner said. 

Without such bonds, the cost of borrowing would be more expensive, resulting in a new burden on taxpayers, the resolution said. 

“This is just a simple statement saying that the council wants Congress to maintain tax-exempt status for municipal bonds and requests that a copy of the resolution be forwarded to our delegation,” Gadner said. 

The resolution said that the federal tax exemption for municipal bonds dates back to the 1800s and was incorporated into the modern tax code 1913. It has been crucial for state and local governments to finance critical infrastructure projects affordably.