Later today, President Biden is expected to host a bipartisan and bicameral group of lawmakers to discuss infrastructure and the potential for legislation this year, the second meeting of this kind in April. Of note for today’s meeting is that all lawmakers invited were former Mayors or Governors, a sign that the Biden Administration is putting the needs of state and local government at the forefront of the policy debate.
The Administration still seems focused on the passage of the robust spending bill in a bipartisan manner, but chances of this approach succeeding seemingly grow smaller by the day. While the road forward to passage is still unclear at this juncture, we remain bullish on the prospect of infrastructure legislation becoming law this calendar year, and the bill including MBFA and BDA priorities.
**The MBFA is planning a virtual fly-in during early May in which we will meet with Senior Administration and Congressional staff to promote municipal bond financing in the context of infrastructure.
More details on the fly-in can be found here.
Muni Legislation Introduced in House
Last week, Rep. Terri Sewell (D-AL) will introduce the “Local Infrastructure Financing Tools (LIFT) Act.” The bill includes several BDA and MBFA priorities, including:
- Reinstate advance refundings as they were in pre-2018 tax law. This provision would take effect 30 days after the date of enactment;
- Expand bank-qualified bonds. The bill would raise the annual issuance limit for bank-qualified bonds from $10 to $30 million, an index that limits annually for inflation, and apply the issuance test at the level of the borrower, not the issuer, so that it will apply to small conduit borrowers. This would take effect upon enactment;
- The bill would establish a new category of tax-preferred financing for state and local governments to be known as Qualified Infrastructure Bonds (QIBs). Similar to the previous Build America Bonds program, QIBs would be an alternative to tax-exempt financing. Issuers would sell taxable bonds and receive a cash reimbursement from the federal government for a portion of their interest expense. Reimbursement payments to issuers would be subject to sequestration, and projects financed with QIBs would be subject to Davis-Bacon prevailing wage laws.
