Bipartisan Senators reintroduce legislation to restore tax-exempt status of advance refunding bonds

-
BlogOn May 9, U.S. Sens.Bipartisan Senators reintroduce legislation to restore tax-exempt status of advance refunding bonds
- Sens. Roger Wicker (R-Miss.) and Debbie Stabenow (D-Mich.) re-introduced the bipartisan LOCAL Infrastructure Act, which would allow counties to advance refund municipal bonds on a tax-exempt basis
- The tax-exempt status of advance refunding municipal bonds has been unavailable to counties since 2017 as a result of a spending offset provision of the Tax Cuts and Jobs Act
- Counties have historically relied on tax-exempt advance refunding to lower borrowing costs, freeing up funds to be used for other important capital projects and minimizing costs to taxpayers
-
Blog
Bipartisan Senators reintroduce legislation to restore tax-exempt status of advance refunding bonds
On May 9, U.S. Sens. Roger Wicker (R-Miss.) and Debbie Stabenow (D-Mich.) led a bipartisan group of 15 Senators to introduce the Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act that, if enacted, would restore the tax-exempt status of advance refunding bonds for state and local governments and other issuers. Issuing advance refunding bonds at a tax-exempt status has been unavailable to counties since the enactment of the Tax Cuts and Jobs Act in 2017. Counties support the restoration of the tax-exempt status of advance refunding municipal bonds and NACo has endorsed this legislation.
Municipal bonds are predominantly issued by state and local governments, including counties, to finance critical infrastructure projects and capital improvements. This includes the construction or improvement of schools, streets, highways, hospitals, bridges, water and sewer systems, ports, airports and other public works.
Prior to 2017, counties could refinance a municipal bond once over its lifetime and more than 90 days prior to the bond’s redemption date at a tax-exempt status. This practice, also referred to as advance refunding, allowed counties to lower borrowing costs and take advantage of more favorable interest rates. Advance refunding bonds allows counties to address problematic bond terms and conditions or restructure debt service payments for budget flexibility. It also frees up county funds to be used for other important capital projects and minimizes costs to taxpayers.
Although the tax-exempt status of advance refunding bonds was eliminated as a spending offset, it has historically been critical for counties across the nation. Before 2017, the savings that local governments experienced from this practice resulted in advance refunding bonds making up a third of the municipal bond market.
The LOCAL Infrastructure Act has been sponsored in the U.S. Senate by Sens. Wicker and Stabenow since the 116th Congress. Although a companion bill has not yet been introduced in the U.S. House, House Municipal Finance Caucus co-chair Rep. Dutch Ruppersberger (D-Md.) and Rep. David Kustoff (R-Tenn.) recently re-introduced the Investing in Our Communities Act (H.R. 1837) which would also restore the tax-exempt status of advance refunding municipal bonds.
As counties continue to invest federal funds in critical infrastructure projects, counties urge federal lawmakers to enact legislation, such as the LOCAL Infrastructure Act and Investing in Our Communities Act, to restore the tax-exempt status of advance refunding bonds.
On May 9, U.S. Sens.2023-05-17Blog2023-09-02
On May 9, U.S. Sens. Roger Wicker (R-Miss.) and Debbie Stabenow (D-Mich.) led a bipartisan group of 15 Senators to introduce the Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act that, if enacted, would restore the tax-exempt status of advance refunding bonds for state and local governments and other issuers. Issuing advance refunding bonds at a tax-exempt status has been unavailable to counties since the enactment of the Tax Cuts and Jobs Act in 2017. Counties support the restoration of the tax-exempt status of advance refunding municipal bonds and NACo has endorsed this legislation.
Municipal bonds are predominantly issued by state and local governments, including counties, to finance critical infrastructure projects and capital improvements. This includes the construction or improvement of schools, streets, highways, hospitals, bridges, water and sewer systems, ports, airports and other public works.
Prior to 2017, counties could refinance a municipal bond once over its lifetime and more than 90 days prior to the bond’s redemption date at a tax-exempt status. This practice, also referred to as advance refunding, allowed counties to lower borrowing costs and take advantage of more favorable interest rates. Advance refunding bonds allows counties to address problematic bond terms and conditions or restructure debt service payments for budget flexibility. It also frees up county funds to be used for other important capital projects and minimizes costs to taxpayers.
Although the tax-exempt status of advance refunding bonds was eliminated as a spending offset, it has historically been critical for counties across the nation. Before 2017, the savings that local governments experienced from this practice resulted in advance refunding bonds making up a third of the municipal bond market.
The LOCAL Infrastructure Act has been sponsored in the U.S. Senate by Sens. Wicker and Stabenow since the 116th Congress. Although a companion bill has not yet been introduced in the U.S. House, House Municipal Finance Caucus co-chair Rep. Dutch Ruppersberger (D-Md.) and Rep. David Kustoff (R-Tenn.) recently re-introduced the Investing in Our Communities Act (H.R. 1837) which would also restore the tax-exempt status of advance refunding municipal bonds.
As counties continue to invest federal funds in critical infrastructure projects, counties urge federal lawmakers to enact legislation, such as the LOCAL Infrastructure Act and Investing in Our Communities Act, to restore the tax-exempt status of advance refunding bonds.

About Maxx Silvan (Full Bio)
Legislative Associate
Maxx is responsible for analyzing legislation and regulatory activities, as well as administrative duties associated with NACo’s Finance, Pensions and Intergovernmental Affairs and Telecommunications & Technology steering committees. Maxx also helps staff NACo’s Federal Fellowship Initiative.More from Maxx Silvan
-
Blog
The County Countdown – September 26, 2023
Every other week, NACo’s County Countdown reviews top federal policy advocacy items with an eye towards counties and the intergovernmental partnership. Watch the video and explore NACo resources below on some of the top issues we're covering this week. -
Blog
The County Countdown – September 13, 2023
Every other week, NACo’s County Countdown reviews top federal policy advocacy items with an eye towards counties and the intergovernmental partnership. Watch the video and explore NACo resources below on some of the top issues we are covering this week. -
Webinar
Earmarks: What Rural Counties Need to Know to Get Started
Sep. 12, 2023 , 1:00 pm – 2:00 pmCongress reinstituted Congressionally Directed Spending (often referred to as earmarks) in early 2021. Since then, hundreds of county governments have secured billions of dollars in funding during the last three funding cycles. -
Blog
The County Countdown – August 29, 2023
Every other week, NACo’s County Countdown reviews top federal policy advocacy items with an eye towards counties and the intergovernmental partnership. Watch the video and explore NACo resources below on some of the top issues we are covering this week. -
Webinar
National Membership Call: Overview of U.S. Treasury New Guidance for ARPA Flexibility
Aug. 15, 2023 , 3:00 pm – 4:00 pmOn August 10, the U.S. Department of Treasury released their Interim Final Rule (IFR) for the bipartisan State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act (i.e. Cornyn/Padilla Amendment) that allows counties to invest American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Fund (SLFRF) dollars more flexibly towards new transportation and infrastructure projects, relief from natural disasters and eligible projects under the Community, Development Block Grant (CDBG) program. -
Reports & Toolkits
NACo Analysis: Overview of New Treasury Guidance for ARPA Flexibility Legislation
On August 10, the U.S. Department of Treasury (Treasury) released an Interim Final Rule (IFR) for the bipartisan State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act
-
Webinar
Strategies for Connecting County Residents with Free Tax Assistance
November 13, 2023 , 1:00 pm – 2:00 pmWith refundable tax credits serving as the largest federal anti-poverty program, tax time is an important opportunity for county leaders to connect low-income residents with vital income supports.11131:00 pm<p>With refundable tax credits serving as the largest federal anti-poverty program, tax time is an important opportunity for county leaders to connect low-income residents with vital income supports.
-
Reports & Toolkits
American Rescue Plan Resource Hub
In March of 2021, the American Rescue Plan Act of 2021 authorized the $350 billion State and Local Coronavirus Fiscal Recovery Fund (Recovery Fund), which provided $65.1 billion in direct, flexible aid to every county in America.Reports & Toolkitsdocument03092:00 pmReports & Toolkits<p>In March of 2021, the American Rescue Plan Act of 2021 authorized the $350 billion State and Local Coronavirus Fiscal Recovery Fund (Recovery Fund), which provided $65.1 billion in direct, flexible aid to
-
Basic page
ClearGov
ClearGov® is the leading provider of Budget Cycle Management software, focused on helping local governments streamline the annual budgeting process by improving the collection, creation, and communication of their budgets.pagepagepage<table border="1" cellpadding="1" cellspacing="1" style="width:100%" summary="call-out transparent">
<tbody>
<tr> -
Basic page
Finance, Pensions & Intergovernmental Affairs Steering Committee
All matters pertaining to the financial resources of counties, fiscal management, federal assistance, municipal borrowing, county revenues, federal budget, federal tax reform, elections and Native American issues. Policy Platform & Resolutions 2023-2024 2023 NACo Legislative Prioritiespagepagepage<p>All matters pertaining to the financial resources of counties, fiscal management, federal assistance, municipal borrowing, county revenues, federal budget, federal tax reform, elections and Native American issues.</p>
Contact
-
Legislative Associate(202) 942-4224
-
Associate Legislative Director – Finance, Pensions & Intergovernmental Affairs(202) 942-4272
Related Posts
-
BlogThe County Countdown – September 26, 2023Sep. 25, 2023
-
BlogThe County Countdown – September 13, 2023Sep. 13, 2023
-
BlogThe County Countdown – August 29, 2023Aug. 29, 2023
Related Resources
-
Reports & ToolkitsNACo Analysis: Overview of New Treasury Guidance for ARPA Flexibility LegislationAug. 11, 2023
-
Policy BriefRestore the Balance of Federalism and Optimize Intergovernmental PartnershipsJul. 1, 2023
-
Reports & ToolkitsFrom recovery to revitalization: How local leaders are unlocking the potential of the American Rescue PlanJun. 30, 2023
Related Events
-
13Nov2023Webinar
Strategies for Connecting County Residents with Free Tax Assistance
Nov. 13, 2023 , 1:00 pm – 2:00 pm
More From
-
Legislative Analysis for Counties: The Consolidated Appropriations Act of 2023
This analysis includes funding highlights for key programs impacting counties.
Learn More