Pitkin County will need to issue bonds to pay for the terminal at Aspen-Pitkin County Airport. Municipal bonds could lose their tax-exempt status under the Trump administration’s budgeting goals, making them less attractive to investors.
Amid talk that the Trump administration wants to target the tax-exempt status of a widely used government financing tool, some Roaring Fork Valley governments are urging the congressional delegation to protect it.
Tax-exempt municipal bonds, also known as “muni bonds,” are debt securities issued by governmental entities, often for high-cost capital projects like infrastructure. They’ve been a longtime target of President Donald Trump in his previous and current administration as a tool to pay for tax cuts.
The interest earned on the bonds is often excluded from gross income for federal income tax purposes and may be exempt from state and local income taxes, according to the Municipal Securities Rulemaking Board.
For the bodies issuing these bonds, it helps attract investors to finance large-scale capital projects or major purchases that cannot immediately be covered by fund balance alone. They’re often used for infrastructure projects that require a lot of money up front, but less from year-to-year.
Tax-exempt status for municipal bonds was codified in the Revenue Act of 1913. Only Congress can revoke the tax-exempt status.
The Government Finance Officers Association warns that the status is under threat in the federal tax reform debate, in which Republicans are likely to use the filibuster-proof reconciliation process to push through some of Trump’s tax-reform goals, according to the Brookings Institute. The GFOA states that nationally, the volume of municipal bond issuance for the period from 2009 to 2019 amounted to $4.2 trillion.
Pitkin County and the town of Basalt both sent letters to the congressional delegation, Sens. Michael Bennet and John Hickenlooper, both Democrats, and Rep. Jeff Hurd, R-Grand Junction, urging them to preserve the tax-exempt status for municipal bonds.
Liz Woods, finance director for Pitkin County, said the county has historically used muni bonds for Open Space and Trails acquisitions, like the Snowmass Falls Ranch purchase.
She said muni bonds are generally attractive to investors because they are usually low risk and the tax-exempt status allows them to deduct the interest earnings from their tax returns. Without that status, the costs of borrowing would go up for governments.
“It definitely means that the cost to do projects would increase because you would have to factor in the additional interest that you would have to provide on these bonds to bond holders,” Woods said. “The bond is going to have to be lucrative enough for them to get enough return on it for them to invest in it.”
It would also put governments in the same market as corporations, Woods said, in competing for investors.
“Now, all of a sudden, the market opens up to, ‘Well, if I’m not going to get the tax exemption, I can consider investing in Apple or something else, instead of Pitkin County or the city of Aspen, or whoever else it may be,” she said.
Jon Stavney is the executive director of the Northwest Council of Governments, a regional advocacy group of counties and municipalities in northwest Colorado.
“It’s been such a simple, beautiful thing for such a long time to not have to go to the state or federal government for money,” Stavney said. “I don’t understand the lack of strategy.”
He and Woods recalled that the status of muni bonds was under threat in Tax Cuts and Jobs Act 2017, though the legislation did eliminate the ability to issue advance refunding bonds, according to financial services company Raymond James.
Stavney said muni bonds draw a lot of investment retirement funds looking for low-risk investments.
In the county’s immediate future, however, muni bonds will be essential to the Pitkin County Solid Waste Center renovation and the modernization project for the Aspen/Pitkin County Airport.
According to Pitkin County’s letter, the fallout from losing the tax-exempt status could “severely hamper” full development of the airport project. The county plans to issue bonds based on revenue from a lease with Atlantic Aviation, the fixed-base operator that handles fuel service and attends to private aircraft.
With an $18 million minimum annual guarantee from Atlantic, the county expects to secure $80 million to $102 million in bonds, based on the 2024 lease extension revenue. The money will help fund the terminal renovation, which the county hopes to rebuild as a net-zero structure and model for climate-conscious infrastructure.
The county’s letter said their municipal advisor told them that the impact could “lower the proceeds from issuing Airport Revenue Bonds by approximately 26% depending upon debt service coverage ratios and interest rates.”
County voters approved a $22 million bond for landfill expansion in November 2024. The landfill is expected to exceed its boundaries in the next five years.
The muni bonds’ tax-exempt status will likely be known in the next month as Congress works through the latest budget reconciliation process — but it could be targeted at any point during the Trump administration. Ann Driggers, the county’s chief financial and administrative officer, treasurer and public trustee, said that until then, it’s hard to say how the loss could affect county projects.
“We haven’t finalized the funding strategy for either the airport or the landfill,” she said. “We still need to work through those.”
Both the airport and the landfill are enterprise funds in the county, meaning they are funded by user fees and not property tax revenue. Without muni bonds, users could see increased fees to help cover the funding shortfall for major infrastructure projects. The Pitkin County Home Rule Charter requires voter approval for bond issuance from enterprise funds, even though the taxpayers aren’t directly involved.
For something like the Open Space and Trails fund, which is not an enterprise fund and does not have a tax collection cap like many other county funds, taxpayers could see a full-potential tax increase to help cover a muni bond that is no longer tax exempt.
In Basalt’s letter, they highlighted the Midland Avenue Streetscape Project, which overhauled aging infrastructure along the main road in downtown Basalt. Part of the Basalt Forward program, the town’s voters approved an $18 million bond to help fund infrastructure, affordable housing and climate-friendly projects in the town.
Neither Bennet nor Hurd’s staff responded to a request for comment by press time.
An Eagle County senior policy analyst said in an email to Aspen Daily News that while their Board of County Commissioners has not sent a formal letter, they have discussed muni bonds “directly” with staff of all three delegates.
Aside from the muni bonds, the county’s other financing tools include certificates of participation, which require unentailed collateral to put down, or fund balances in the county budget.