WHEREAS, the Government Finance Officers Association both has defended and sought to strengthen the present system of tax exemption of interest on municipal bonds, the attributes of which are contained in its policy of May 28, 1969 which required:

• Conformity to the Constitution, preserving the Federal system by protecting state and local governments from Federal compulsion.
• Freedom from Federal controls of policy decisions which are properly the sole province of state and local governments.
• A saving in the cost of borrowing-without which the present urban crisis would become more aggravated by requiring increased property, sales and other local taxes, and a reduction in essential services.
• Freedom from the uncertainties of the recurrent annual federal appropriation process to obtain state and municipal capital needs or any portion of their interest costs.
• Protection of and freedom of access to viable capital markets of their own choice without reliance on a dominant Federal financial institution.
• Expedition in their borrowing, free of the delay of Federal clearances which can make them miss their optimum interest market timing and can force them into increased capital costs as construction costs continue to rise; and

WHEREAS, the Association restated and readopted the above longstanding policy by resolution adopted May 5, 1976, and stated its belief that then pending proposed legislation to provide a taxable bond option for state and local government issuers did not conform with this policy; and

WHEREAS, it appears that the resolution adopted May 5, 1976, has been misinterpreted by some as an acceptance by the Government Finance Officers Association of the concept of the taxable bond option, when no such acceptance was intended; and

WHEREAS, the Government Finance Officers Association wishes to clarify its position on this matter;

THEREFORE, BE IT RESOLVED that the Government Finance Officers Association states its policy towards the taxable bond option as follows:

• The Government Finance Officers Association does not support the taxable bond option.
• The Government Finance Officers Association's Executive Board through its Committee on Governmental Debt and Fiscal Policy, is authorized to and directed to continue to review this matter and report back to the membership any recommendations for further policy as may be appropriate.

• Publication date: April 1977