An op-end piece in the Birmingham Business Journal, entitled, "How Congress can help Alabama's communities get more for less," urges the adoption of House Bill 2319, which would restore Prime and Muni Inst money funds' stable NAV. It says, "When Congress reconvenes for a lame duck session following the November elections, it will have an opportunity to protect our communities and local taxpayers from the negative impact of higher interest rates. There is bipartisan legislation ready to be voted on that would protect our state from higher interest rates and borrowing costs by restoring money market funds as an important source of low-cost capital markets financing. This legislation (HB 2319 in the House and SB 1117 in the Senate) would effectively reverse a Securities and Exchange Commission (SEC) regulation that hurt the ability of money market funds to invest in our state." Author John McMillan, commissioner of the Alabama Department of Agriculture and Industries, explains, "As a result of the regulation, which forced money market funds to operate on a floating rather than stable value basis, investors withdrew $1.2 trillion in assets from money market funds that support local economies to funds that invest strictly in U.S. government debt. Tax-exempt money market funds, which are the largest investors in the short-term debt issued by state and local governments for public infrastructure and economic development, dropped by 50 percent. According to a recent study by financial consulting firm Treasury Strategies, state and local government entities in Alabama lost more than $500 million in funding from tax-exempt money market funds between January 2016 – when implementation of the SEC rule started to be phased in – and April 2018. Over the same period, borrowing costs for our state entities that issued debt to tax-exempt money market funds rose from an average of .05 percent to 1.77 percent." The letter adds, "Congress needs to enact legislation to restore the stable value for all money market funds. This would significantly and immediately increase investor demand for tax-exempt debt and lower the cost of borrowing for infrastructure and economic development projects. The bill pending in Congress has the support of more than 300 national, state and local organizations, including 30 from Alabama. Supporters include elected leaders, public and private sector finance officers, trade organizations and local chambers of commerce.... We ask our state's Congressional delegation to support enactment of legislation to restore the stable value of money market funds."
