Local elected leaders are racing through a bond refinancing approval process for county jail bonds in order to keep tax perks that could be eliminated next year by proposed Republican tax law changes.
Under the current Republican proposal, the tax-exempt status on some refinanced government bonds will not be available after Jan. 1, said Scott Keene, vice president and managing director with Ameritas.
That tax-exempt status makes the bonds attractive to some investors and can be sold with a lower interest rate.
Refinancing the county jail bonds, with the tax-exempt status, will save Lincoln property taxpayers between $4.2 million and $5 million over the next 10 years, or about $440,000 to $540,000 a year.
The county had already begun the process for refinancing the bonds before the new tax law proposal came up, Keene said.
But staff is speeding up the process, driven by the GOP tax plan. The goal is to get the refinancing package approved by the County Board, the Lincoln City Council and the Jail Joint Public Agency by Dec. 4. The bonds could be on the market a few days later, well in advance of what could be a Jan. 1 tax law change, Keene said.
“We expect there could be a rush of municipal bonds coming to market, but that will happen after our issue (of bonds),” said Keene.
Both the city and county have refinanced bonds over the past decade, taking advantage of the very low interest rates, and saving taxpayer and ratepayer dollars.
The city is saving $24 million on the refinancing of 14 bonds over the past decade, including bonds for water, sewer projects and highway projects.
Five of those bonds could not have retained the tax-exempt status if the GOP tax law had been in effect at the time, eliminating about half the $24 million in savings, according to a city staff analysis.
The Public Building Commission, which builds and remodels buildings for both the county and city, has refinanced five bond series since 2005, with savings of more than $5.8 million, according to Keene.
The proposed tax change also eliminates the ability of private nonprofit companies to use the county’s bond authority and get the tax-exempt status and lower interest rates when refinancing bonds.