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States Scrambling to Refinance before Tax Reforms

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With the possible elimination of tax exemptions for state and local debt in the tax reform bill being pushed through Congress, states that rely on debt refinancing are scrambling to borrow before the end of the year. Any investor or stakeholder in industry tied to a government tax break or subsidy should consider this a wake up call. What the government can give with the stroke of a pen, it can also take away with the stroke of a pen. Ethanol mandates, electric vehicle subsidies, renewable energy programs, R&D tax deductions, and on and on. If your business, or a business you invest in relies heavily on a government handout or preference, consider that a risk in your calculations. Heather Gillers explains at the Wall Street Journal how states and municipalities are scrambling to borrow before the new rules kick in:

The expected change in policy is already prompting cities and states to fast-track their advance refunding offerings before the end of the year. One underway is from the state of Wisconsin, which last week circulated preliminary advanced refunding documents for $375 million of transportation revenue bonds.

“We just want to get ahead of the possible large amount of supply that could hit the muni market in December,” said the state’s capital finance director David Erdman, who had originally expected to refinance the debt in 2018 or 2019.

New York’s Metropolitan Transportation Authority sold $2 billion in transportation revenue bonds Monday and Tuesday partly to get ahead of any potential change in tax policy said spokesman Aaron Donovan.

Read more here.

Originally posted at Yoursurvivalguy.com.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.