Public finance leaders brace for Trump transition

The consequences of the election have public finance leaders making plans for addressing key issues vital to the municipal bond market.  

“The most oblivious and pressing issue is preserving and protecting all tax-exempt bonds during any attempt at tax reform,” said Toby Rittner, president and CEO of the Council of Development Finance Agencies.  

“We feel the coalition around this is strong and vocal, but we will continue to push this issue should the tax-exemption come under attack again.”  

The comments came in conjunction with a transition paper published by the CDFA on Tuesday. The paper outlines a wide variety of areas of interest including aggie bonds, and disaster recovery bonds, along with volume caps on water and sewer bonds.  

Lobbying groups are also keenly focused on a laundry list of legislative items.

“Congress has been afforded the chance to reevaluate policy decisions made in 2017, and we urge them to further embolden Americas’ infrastructure by promoting municipal bonds, reinstating tax-exempt advance refundings, raising the bank-qualified limit, and exploring options to further utilize and expand private activity bonds,” said Brett Bolton, SVP, Bond Dealers of America. 

“The year 2025 brings a real opportunity for the Public Finance Network to flex its advocacy muscles, and we look forward to continued work with our issuer colleagues ensuring the tax-exemption remains safe.”  

In addition to the bond priorities, the paper pushes for supporting rural development through tweaks to the Farm Bill and strengthening the State Small Business Credit Initiative. 

“We would like to see renewal of the Opportunity Zone program, passage of the Modernizing Agricultural and Manufacturing Bonds Act to improve manufacturing bonds and the development of a few new private-sector leveraged financing tools like Local Economy Preservation Funds and a federal Tax Increment Finance bond guarantee program,” said Rittner.

TIFs are a popular development tool that drives private sector investment and the CDFA wants to broaden their appeal by “creating a federal TIF credit enhancement for bonds secured with revenue generated by a qualified TIF project. This would be designed in the form of a federal guarantee.” 

As Republicans take over the Senate and most likely the House, some committee chairs will flip as the search for muni champions recalibrates. 

“There are lots of friends of munis on Capitol Hill,” said Rittner. “Back in the 1990s and early 2000s, Republicans carried the support for tax-exempt bonds. Routinely in the early 2000s, Republican-led bills were the way we passed improvements to bonds.” 

“We feel that Republicans are very supportive once again and that this is a great time to engage both Republicans and Democrats on substantiative efforts to improve all tax-exempt bonds.”  

On the regulation side, the incoming Trump administration has signaled strong support for loosening restriction on the crypto market. The price of the bitcoin currency has gained about 30% since the election. 

Most experts believe Securities and Exchange Commission Chairman Gary Gensler will not complete serving out his term, which runs to 2026. 

Gensler has a reputation for applying strict rules on the securities market. The day after the election, the American Securities Association released a statement.   

“Last night the people voted for this country to take a new direction, and Chairman Gensler should respect that vote by stepping down from his position immediately,” said ASA President and CEO Chris Iacovella. 

“This is the only way for America’s working families, retirement savers, and small businesses to rebuild their trust and confidence in the institution of the SEC.”