This is a guest opinion column
At face value, municipal bonds aren’t the type of thing that gets a lot of people excited. Some might even call them a boring subject of conversation. But they are anything but.
They make growth and innovation possible in cities like Birmingham, and right now they are on the chopping block for losing their federal tax-exempt status. This would create a potentially insurmountable hurdle for long-term capital projects, like bridge repairs, development of parks and outdoor spaces, affordable housing and on and on and on.
Currently, the municipal bond market in the United States is showing positive signs of growth and stability. Year-to-date in 2025, the issuance rate of municipal bonds is up 13 percent with no indication of slowing down. We’re in a good place.
However, the current administration is looking to roll back tax exemptions on municipal bond interest, despite resistance from local, state and federal lawmakers. I, along with my colleagues on the Birmingham City Council, recently had a chance to sit down and talk with our congressional leaders about this issue and the consequences this would have on cities like Birmingham.
It’s no secret that we have many projects that need federal funding in order to come to fruition. In my district alone, I can think of several, including storm water improvements and railroad crossing infrastructure. Both of which have an immediate, daily impact on the health and wellbeing of my neighbors.
We did receive assurances from the lawmakers we spoke with that they’re in our corner and advocating for these tax exemptions to continue, but as we’ve seen in recent months the unpredictability of this political climate leaves us with an high level of cautious uncertainty about what comes next.
Without feasible access to municipal bonds, America wouldn’t have iconic public transit systems like the NYC subway system or the Golden Gate Bridge. New Orleans would’ve struggled even more to rebuild post Katrina. Cities across the country would still have dangerously outdated drinking water and sewage systems. And here at home, we wouldn’t have Regions Field, which has sparked millions and millions of dollars of investments in a previously underutilized segment of our downtown. It used to just be old rusted warehouses and now it even has a name: Parkside.
Beyond that, the City of Birmingham has utilized this tool for improvements on dozens of parks and recreation centers across the city. In 2017, $14 million in 25-year bonds were utilized for the construction of the Birmingham CrossPlex Village, which has anchored Five Points West in the years since.
Municipal bonds have been a linchpin of public financing for over a century and we need to be speaking with one voice on why we cannot afford to lose this critical tool. Call your representatives and let them know where you stand.
If the tax-exempt status of municipal bonds were eliminated or reduced, local governments would face higher borrowing costs, which could eventually be passed on to taxpayers in the form of increased fees, higher property taxes, or reduced public services.
Congress has an obligation to reaffirm its commitment to progress in America. Preserving this status ensures that local governments can continue to keep borrowing costs down, while allocating more resources directly to services that residents need daily. This is way more than just sound fiscal policy, it’s a covenant to the long-term health, and future viability of our urban and rural communities. And while the tax-exempt status of municipal bonds might not seem like a fun topic, I can assure you none of us will be having fun without them.
Crystal Smitherman represents District 6 on the Birmingham City Council.