Bellone, Mangano join call to preserve tax-free bonds

At a hearing last month the House Ways and Means Committee examined the possibility of eliminating or capping the exemption on interest earned on municipal bonds as a way to help reduce the federal deficit. Local governments sell the bonds routinely to finance projects including road repairs and park restorations.

"It would be very unwise for us to eliminate the tax exemption for municipal bonds, because it really is just a cost shift from the federal government to the local governments," said Bishop, who was accompanied by Suffolk County Executive Steve Bellone and county Comptroller Joseph Sawicki. "We would either see higher property taxes or less of what Suffolk County needs."

Sawicki said if the tax-free bond system were eliminated, the cost to the county on bonds and notes issued with taxable interest would increase by nearly $12.8 million a year.

"Our economic growth and economic development plans in the county depend on the ability to issue tax-free municipal bonds," Bellone said.

Nassau Comptroller George Maragos called the possible elimination of the tax exemption "a hidden federal tax increase imposed on municipalities and local residents" that could "increase borrowing costs and reduce infrastructure investment destroying good-paying jobs."

With Robert Brodsky