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.2023-05-17Blog2023-05-17
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
-
Press Release
National Association of Counties Issues Statement on Bipartisan Debt Ceiling Deal
WASHINGTON – The National Association of Counties (NACo) today issued the following statement urging Congress to pass the Fiscal Responsibility Act of 2023, a bill to provide for an increase to the debt ceiling and avoid default on the national debt. NACo Executive Director Matthew Chase said: -
Blog
Counties & the national debt: What defaulting on the national debt could mean for counties
At some point soon the United States government could default on the national debt. U.S. Treasury Secretary Janet Yellen has stated that if the federal debt ceiling is not raised by June 5, the federal government could miss or delay payments on their obligations resulting in a technical default. -
Blog
Pima County leans into innovation to enhance sustainability
This blog post is sponsored by NACo partner American Gas Association. Unlock the potential of wastewater facilities: Transform waste into clean, renewable energy and contribute to your county's sustainability goals. -
Reports & Toolkits
Myths & Facts: American Rescue Plan Coronavirus State & Local Fiscal Recovery Funds
The Coronavirus State and Local Fiscal Recovery Fund (SLFRF), part of the American Rescue Plan Act (ARPA), allocated $65.1 billion in direct, flexible aid for every county, parish and borough in America. -
Webinar
Membership Call: Overview of U.S. Treasury Updates for ARPA Recovery Fund Project and Expenditure
Apr. 19, 2023 , 4:00 pm – 5:00 pmUnable to attend? Watch the recording here. -
Webinar
Improve the Permitting, Licensing, and Workflow Experience: Introducing ClearForms from ClearGov
Apr. 13, 2023 , 1:00 pm – 2:00 pmUnable to attend? Watch the recording here.
-
Webinar
Worried about inflation? Strategies for Increasing Non-Tax Revenues.
June 8, 2023 , 1:00 pm – 2:00 pmHosted by Joe Rulison, CEO, and William (Bill) Cherry- Director of Public Partnerships of three+one. This webinar will equip you with the latest knowledge and trends in liquidity management. This presentation is designed to help you optimize your cash management operations and generate new revenue streams.06081:00 pm<p><strong>Hosted by Joe Rulison, CEO, and William (Bill) Cherry- Director of Public Partnerships of three+one.</strong></p>
-
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 2022-2023 2022 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
Related Resources
-
Press ReleaseNational Association of Counties Issues Statement on Bipartisan Debt Ceiling DealMay. 29, 2023
-
Reports & ToolkitsMyths & Facts: American Rescue Plan Coronavirus State & Local Fiscal Recovery FundsApr. 24, 2023
-
DocumentState and Local Tax (SALT) Deduction Legislation in the 118th CongressApr. 6, 2023
Related Events
-
8Jun2023Webinar
Worried about inflation? Strategies for Increasing Non-Tax Revenues.
Jun. 8, 2023 , 1:00 pm – 2:00 pm
More From
-
Strengthening Local Economies through the Recovery Fund: Executive Summary
NACo's report examines how counties are leveraging American Rescue Plan resources to support communities and rebuild the economy, even as the pandemic continues to affect jobs, public health, housing, and more.
Learn More