Last week, Northampton County Council voted 5-4 to reject a $65 million borrowing plan in the form of municipal bonds to cover the cost of a new parking deck, county office building, updated radio system for first responders and other capital projects that include improvements to the Civil War era jail. Because I believe these are all needed, I would have joined Council members Ron Heckman, Jeff Warren, Kelly Keegan and Ken Kraft in voting Yes. But the five Council members who voted No might have done us all a favor. Instead of full speed ahead, we might wish to lower the sails of SS NorCo County until the winds die down following Trump's election as President.
According to Governing, Trump tariffs and renewed tax cuts means a larger federal budget deficit and increased inflation, and that means higher interest rates on municipal bonds. In fact, that's what has been happening over the past two months.
In an attempt to reduce the increased deficit caused by renewed tax cuts and tariffs, Bloomberg reports that some Republicans are considering the elimination of tax-exempt municipal bonds, under which investors pay no tax on the interest earned. Though the likelihood of this happening is small, Republicans now control all three branches of government.
Even if the tax exemption for muni bonds is untouched, there is likely going to be less demand for them. That's because of a reduction in corporate taxes, favored by Trump and his Republican government.
In the short time since Trump's election, interest rates on muni bonds have soared. Once things have settled down, the actaul cost to taxpayers of a borrowing plan will be more certain. Right now it is not.
9 comments:
When was the County Prison last renovated? Didn't they expand the prison and the work release facility a few years ago? If they need office space, maybe it is time to move to the Gracedale Complex which is located in the middle of the County. Plenty of room for growth and parking. Let the Courts have the Court House/government center and level the parking garage and make it all surface parking instead of multi levels. There is plenty of space to expand at Gracedale. They should do a needs assessment study to determine which expansion/rehab project would be least costly and most efffective in providing services to the public. There is nothing more inefficient than expanding at the present site and paying high fees for a Bond to fund the project.
The costs with respect to interest rates are relative. The costs of construction always go up. Whatever rate you borrow out will not offset the additional construction inflation which is inevitable. Waiting equals higher costs to the taxpayers.
The exemption for municipal bonds cuts costs for municipalities but thus encourages government spending.
The benefit of owning the bonds goes to people with high incomes in high tax brackets.
This parking structure is dangerous, and must be closed and razed.
we already had great terms, now we will not have the borrowing abilities that we had when Trump gets in and he ruins the economy with his new cast of clowns
This County Council is not just inept, but dangerous. Take Jeff Corpora’s almost criminally stupid exception to the County Burn Ban for the Easton bonfire. Corpora stated when advocating for the exception to the Burn Ban while the Blue Mountain was burning, “it’s such a formative experience for the students.” Hey Jeff, so would burning Grandma’s house down. To prove he’s a moron, Corpora doubled down on his exception to the Burn Ban to have a giant bon fire, “I wanted to give them a glimmer of hope.” This guy should be no where near power with scrambled eggs for brains like this.
Elections DO have consequences. This election has OHare now reading and considering articles written by right leaning, conservative Utah republican PACs like Governing. How delightful!
LVR has turned into Sour Grapes Whining. Well at least BO will have something to complain about for the next 4 years.
7:22, I have read and cited articles from "Governing" for many years and through many presidents. I do so bc of its focus on local government, not any ideology. During that time, ownership has changed several times. It is actually owned by Scientologists at this moment, lol. I do not limit my reading to publishers with whom I agree.
I do not think the current article I cite is particularly flattering to Trump to those of us who oppose his policies. But that's not the point. The point is the impact his election is having on muni bonds. Now is not a good time for a government to sell them. A few months ago would have been a good time, but not now. In a month or two, the picture should be clearer.
Let me add that the points made in Governing are buttressed in Bloomberg and Wall Street Journal. Those are also somewhat conservative publications bc they are business oriented. I rely on them less often, not bc of ideology but bc of the paywall. They are good sources.
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