TAMPA - If you believe a new stadium for the Tampa Bay Rays is going to be built somewhere in the bay area in the next few years, you can bet it will financed at least in part by tax-exempt bonds.
Bonds are more popular than tax increases and they're easy to sell because investors can collect interest payments free of federal taxes.
But that tax exemption costs the U. S. Treasury an estimated $140 billion dollars a year. That makes it a tempting target for a Congress desperate to reduce the budget deficit.
"I think the consequence would be dire for the whole country," said Tampa City Council member Harry Cohen.
Cohen believes if the federal government takes away the tax deductibility of bond interest, it would make essential projects like road construction, bridge repairs and sewer upgrades more expensive.
"Basically, what this proposal would do is make investing in municipal bonds much less attractive and therefore it would cost the cities, states, and municipalities much more to borrow money, and that would be an added burden to the taxpayers.
Essential infrastructure projects may take longer but they'll still get done. But what about non-essential projects like a light-rail system, or a new stadium for the Tampa Bay Rays? Harry Cohen thinks they'll get a harder look.
"For every increment the cost goes up you're going to hear arguments about whether or not the costs and benefits equal each other out."
The good news is that Tampa's debt payment is just over ten percent of the total budget. Chief Finance Director Sonya Little says Tampa is better off than most cities when it comes to debt.
We have very, very low percentage of debt outstanding for our overall capital expenditures," she said.
Mayor Bob Buckhorn thinks it highly unlikely that this tax exemption will be taken away as part of a debt deal in Washington. Still, the city has high-powered lobbyists actively working to make sure it doesn't happen.
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