(March 26): A group of public finance bankers, who have so far largely focused their attention on Congress, are now reaching out to the Trump administration to make their case for keeping state and local government debt tax free.

The Bond Dealers of America plans to meet next month with the Treasury Department’s public finance unit and is working to set up sessions with other Trump administration officials, according to Brett Bolton, a spokesperson for the Washington-based lobbying group representing securities dealers and banks.

Local governments, bankers and investors have been on alert since the federal tax break landed on a list of items up for the chopping block as Republicans seek ways to raise money to extend President Donald Trump’s 2017 tax cuts. Congressional GOP who returned to Washington on Monday will be negotiating a tax bill package this week to deliver those reductions. The muni tax exemption — seen as the underpinning of the public finance market — is among the top 30 federal tax expenditures, according to the Bipartisan Policy Center.

“It makes sense to speak with Treasury and members of the Trump administration to ensure the Trump administration knows the importance of tax-exemption in the rebuilding of the nation’s infrastructure,” Bolton said on Monday.

The Treasury Department did not respond to requests for comment.

Meeting with federal agencies is an extension of the slew of so-called fly-ins municipal lobbying groups have held this year with members of Congress and their staff. It also comes as the Trump administration shows it is taking a more active stance on reforms and not relying solely on Congress.

The industry, however, plans to continue efforts on Capitol Hill. This week Municipal Securities Rulemaking Board officials will be meeting with congressional members and staffers, Aleis Stokes, a board spokesperson, said in an email.

Muni officials have been sitting down with federal legislators to educate them about the role the tax exemption plays in lowering state and local governments’ borrowing costs compared to the taxable market.

The loss of the federal subsidy could make the cost of issuing municipal bonds prohibitive for small issuers, meaning a large swath of issuers could lose access to the market, according to an MSRB fact sheet. In 2024, 65% of tax-exempt debt issues were less than US$25 million (RM110.66 million) in size, according to the board’s data.

Uploaded by Siow Chen Ming