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6.1.H. - Page 5 ATfACHMENT 2 <br /> exemption on municipal bonds at 28 percent had been in place over the last 10 years it would have cost <br /> state and local governments an additional $173 billion in interest costs. Total repeal of the exemption <br /> over that time would have cost state and local governments over $495 billion in additional interest <br /> costs. Given the severe budget constraints that state and local governments have faced since the <br /> national financial crisis of 2008, it is very likely that many of the infrastructure projects funded through <br /> tax exempt bonds would not have been possible. <br /> Proposals to cap the exemption would also introduce uncertainty into the municipal market, causing <br /> investors to fear additional federal intervention in the market where none has existed for the past 100 <br /> years. Ultimately these investor concerns translate into demands for higher yields from and increased <br /> costs to state and local governments. If these entities are unable to satisfy investor yield demands, then <br /> either needed infrastructure projects will not move forward or the costs of these projects will be passed <br /> on directly to state and local tax and rate payers. <br /> The municipal tax exemption has a long history of success, having been maintained through two world <br /> wars and the Great Depression, as well as the recent Great Recession, and it continues to finance the <br /> majority of our nation's infrastructure needs for state and local governments of all sizes when no other <br /> source exists to do so. We cannot afford to abandon the great success of this important financing <br /> instrument, especially as state and local governments continue to recover from the economic downturn. <br /> Thank you for your consideration of this important request. I look forward to working with you to <br /> preserve this irreplaceable infrastructure financing resource. <br /> Sincerely, <br /> Alicia C. Aguirre <br /> Honorable Mayor <br /> City of Redwood City <br /> C: Barbara Boxer, United States Senator <br /> Jennifer Whiting, League of California Cities,jwhiting@cacities.org <br /> City Council <br /> Robert Bell, City Manager <br /> Page 2 of 2 <br />