KITTERY, Maine — Town Council members are imploring Maine’s congressional delegation to oppose the potential elimination of federal tax-exempt municipal bonds, a move they warned would increase the town’s property taxes for residents.
Countless municipal projects nationwide are funded by tax-exempt bonds, including the estimated $15 million in improvements coming to Memorial Field and the Kittery Community Center approved by voters in the November election. If the two bonds for the projects are not exempt from federal taxes, costs will soar and be reflected on future property tax bills.
A sign greets people entering Kittery, Maine.
Town Council chairperson Judy Spiller sounded the alarm Wednesday night at a special meeting called by the council.
“On a very basic level, what it means is that Kittery taxpayers will be paying a significant amount more in their property taxes,” she said.
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Trump administration considering ending the tax exemption
The Maine Municipal Association is advising town and city governments statewide that the Trump administration is considering removing the tax exemption on municipal bonds. The National League of Cities stated last week the tax exemption is at “serious risk” of being removed, per the Maine Municipal Association.
Kate Dufour, advocacy and communications director for the association, authored a March 27 memo to elected and municipal leaders around Maine. In it, she noted Maine Municipal Association funded roughly $9 million in tax-exempt bonded projects last year. Without the tax-exempt status, she estimated municipal borrowing costs would increase by 25% to 50% per bond, leaving property taxpayers on the hook.
“In Maine, municipal bonds have funded countless community projects, including essential infrastructure projects such as schools, roads, water systems, and public safety facilities,” Dufour wrote. “The tax-exempt status makes these bonds especially valuable, as it keeps borrowing costs low for municipalities and reduces the financial burdens placed on property taxpayers.”
Municipal bonds have been tax-exempt since 1913, according to the Internal Revenue Service.
A resolution was passed by the Kittery Town Council Wednesday calling upon the state’s congressional delegation to step in and help save the tax exemption.
The four present councilors unanimously passed and signed the resolution on Wednesday, which will then be sent to the four elected officials. Three council members — Cyrus Clark, Cameron Hamm and H. Scott Mason — were all absent from the meeting.
The Maine Municipal Association is calling upon municipalities throughout the state to contact Maine’s congressional delegation and pass resolutions similar to Kittery’s.
This article originally appeared on Portsmouth Herald: Kittery: Taxes will spike if Trump administration ends bond exemption