WASHINGTON - Many state and local officials are justifiably excited that life in the municipal sector may be far better under the incoming Clinton administration.

And they certainly have good reason.for optimism.

For the first time in 12 years, the White House will be occupied by a President who both knows and appreciates the value of municipal bonds and who wants to rebuild the federal-state partnership that languished during the Reagan-Bush years.

Two months before he even takes office, President-elect Bill Clinton has an agenda that has many state and local officials salivating, especially his proposals to help rebuild infrastructure, reform health care, ease the curbs on tax-exempt bonds, and reduce the deficit.

Even though Clinton appears to be on their side, state and local officials have to be careful not to become complacent. After all, there is a wide gulf between what Clinton may want to do and what, in the end, the country can afford to do without further exacerbating the budget deficit.

Once he takes office, Clinton will be under pressure to solve a myriad of problems and state and local officials are going to have to lobby vigorously to keep his attention.

State and local leaders, many holding widely divergent views, made a good start toward that end 10 days ago when they held the first of three meetings designed to develop an agenda to present to the new president.

Particularly notable was the general agreement among the governors, mayors, and state and county legislative officials that the agenda should not appeal for large amounts of money, but should propose the creation of a new active partnership between the White House and municipalities.

However, it is also worth noting that some at the meeting felt strongly that the state and local officials should not press the new President and should wait for him to summon them when he is ready for their input.

A new President deserves time to assemble his program. But state and local officials can't afford to sit back and wait.

One area where state and local leaders and municipal market participants should be asserting themselves right now is over the need early next year to resurrect the use of mortgage bonds, small-issue IDBs, and the low-income housing credit that all expired last June 30. They also need to push to have Clinton's first tax bill include the favorable bond provisons that were in the tax bill President Bush vetoed.

While Clinton is expected to support the bond measures, they will not be approved by magic. The proposals will have to fight with many other worthwhile ideas for scarce funds.

And that means that state and local officials and municipal market participants need to start making their case immediately.

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