NASAO supports maintaining tax-exempt status

The National Association of State Aviation Officials (NASAO) and several other transportation associations recently voiced their support of Congress maintaining the tax-exempt status for Private Activity Bonds (PABs).

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The House version of the tax bill eliminates the tax-exempt status while the Senate version maintains it. Eliminating the status would result in more expensive infrastructure projects or projects being canceled.

Bonds are issued for infrastructure projects nationwide.

“PABs are traditionally the means of tax-exempt financing for surface transportation projects, airports, port facilities, water and water waste facilities, multi-family housing projects and certain other exempt facility bond projects,” the letter to Congress said. “PABs also include bonds for schools, universities, and hospitals. In total, states can issue PABs to a subset of 22 activities. Removing this tool will have a far-reaching impact across all classes of infrastructure.”

The total of PABs issuance in 2016 was $20.38 billion. The previous year, issuance was $12.98 billion, and in 2008, was between $10 billion to $15 billion.

The Trump Administration’s infrastructure plan calls for lifting the $15 billion cap on using PABs for surface projects. Eliminating the tax-exempt status undermines this plan, the letter said.

Over the next five years, airports will need $100 billion to fund their infrastructure needs.