The new federal tax bill awaiting President Donald Trump's signature spares some concerns for cities and historic preservation groups, but it takes away a positive tool for governments in refinancing debt and removes tax benefits from commuters.
It's also expected to deal a blow to traditional and charter schools, officials said
The bill, which represents the first change in the tax code in 30 years, eliminates the tax incentive for private employers who now subsidize their employees' transit, parking and bicycle commuting expenses.
Currently, companies can provide parking or transit passes worth up to $255 a month to employees as a benefit to help pay for their commuting expenses, and then deduct the costs from their corporate taxes. That amount was set to increase to $260 a month on Jan. 1.
Because the tax bill drastically eases corporate tax burdens, lawmakers reasoned smaller tax breaks that complicate bills weren't necessary. If they wanted to, companies could still provide the transit benefit to employees but without the tax deduction.
However, employees who pay for their own transportation costs can still use their pre-tax income.
The loss of the employer tax benefit has transit agencies worried that it could lead to a decline in ridership.
Michael Noland, general manager of the South Shore commuter railroad, said Thursday he hoped commuters would take advantage of the pre-tax savings plan. "Most of our users are taking advantage of it. It's like you sign up for a 401K and your payroll department reduces your pay, like a flexible savings plan."
Noland said he's hopeful employers will continue to pick up the commuter subsidy. "Employers can still pay for it, they just can't deduct it. They just got a huge tax break."
It's too early to tell what the elimination of the bicycle commuter subsidy would mean because the South Shore just started its "Bikes on Trains" program last year.
"We have 50 percent more use this year, but we're starting small. I can't say if it will have a significant short-term impact."
If the tax cuts spark the economy and create more jobs that lead more people into Chicago, Noland said ridership could increase.
Local mayors like Gary's Karen Freeman-Wilson can relax after learning the reconciled tax bill didn't eliminate the New Market Tax Credit, a popular tool for rebuilding urban communities.
It was used in Gary to build Charter School of the Dunes, Fresh County Market, Veterans Village, South Shore Commons and Gardens on Carolina.
They also spared the historic-preservation tax credit, although it's limited to federally designated structures.
Brad Miller, director of the Indiana Landmarks field office in Gary, said the tax restores the full 20 percent historic-preservation credit, but instead of recapturing the credits in one year, the measure pushes it to a five-year period before the credits can be captured.
Miller said the use of the tax credit is prevalent in Northwest Indiana. For example, Miller said historic-preservation credits were used in the renovation of 212 E. Lincolnway in Valparaiso, in a building that houses Buffalo Wild Wings. They were also used in the renovation of the Dalton Arms apartment in Gary.
Miller said there was a 10 percent credit on historic structures built before 1936, even if those buildings weren't on the National Register of Historic Places. Now, only buildings on the register are eligible.
"The steak and potatoes of the whole tax program are still there; they thankfully kept them," he said.
The tax bill killed a refinancing option that cities and schools used to reduce debt by lowering interest rates with advance refunding bonds.
The School City of Hobart used the tool when it refinanced its high school and saved taxpayers millions, according to school officials.
Nationwide, an official from the National Association of Counties said advanced refunding accounted for a savings last year of $3 billion to $5 billion.
The looming loss of the advanced refunding tool spurred the Lake Station City Council to authorize the sale of bonds to refinance its City Hall mortgage before the year ends.
The tax exemption for private activity bonds, another tool used by urban cities to stimulate growth, was restored in the final version of the tax bill.
Concerning schools, the tax bill eliminates a borrowing tool called the Qualified Zone Academy Bond, which allows traditional and charter schools to borrow at lower interest rates.
Local federal lawmakers voted predictably along party lines.
U.S. Rep. Peter J. Visclosky, D-Merrillville, said in a statement:
"I opposed the Republican tax bill (Wednesday) because it is nothing more than a $1.5 trillion tax cut paid for by working class individuals and families."
Eliminating the health insurance mandate will cause havoc in the insurance markets, he said, and increase premiums and harm the effectiveness of doctors and hospitals.
"True tax reform should provide greater equity among all taxpayers, encourage productive economic investments, and not increase our national deficit," Visclosky stated.
U.S. Sen. Joe Donnelly, D-Ind., said in an opinion piece that the new law will cut taxes for wealthy Americans while raising them on the majority of taxpayers making less than $75,000 annually.
U.S. Sen. Todd Young, R-Ind., heaped praise on the bill in a video statement.
"This bill repeals the harmful Obamacare individual mandate tax, allowing families to choose health care that's right for them," he said. About 140,000 Hoosiers were impacted by the mandate, he said.
Young called the plan "simpler and fairer."
The Associated Press contributed to this report.