Shaheen Introduces LOCAL Infrastructure Act
**Legislation Would Restore Advance Refunding for Local Governments**
(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH) today introduced the Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act of 2021 with U.S. Senators Roger Wicker (R-MS) and Debbie Stabenow (D-MI). The legislation would amend the federal tax code to restore state and local governments’ ability to use advance refunding to manage bond debt and reduce borrowing costs for public projects. This initiative could provide a boost to local communities across the nation as they continue to grapple with the economic effects of the COVID-19 outbreak.
“During my conversations with New Hampshire officials over the past year, I’ve heard repeatedly about the dire financial strains our state and local governments are facing as a result of this pandemic, threatening their ability to perform essential public works projects like water system maintenance, road repairs, school construction and so much more,” said Senator Shaheen. “This legislation would restore advance refunding to our state and local governments, providing them with urgently needed relief to refinance existing infrastructure projects that our communities need to continue to thrive. I’ll keep fighting in the Senate to secure additional resources that will help our state and local governments survive this crisis.”
The Senators’ legislation comes in response to calls from state and local leaders for the federal government to provide additional support to communities as they assess the impact of the coronavirus outbreak on their budgets and begin planning for the future.
Advance refunding would allow state and local governments to refinance outstanding municipal bonds to more favorable borrowing rates or conditions before the end of the initial bond term on a tax-exempt basis. This process is very similar to how a homeowner may refinance the mortgage on their property to lock in a lower interest rate. The federal tax-exempt debt could be refinanced only once, but local communities would be able to take advantage of the lower interest rates to generate additional savings on existing bonds. Local governments could reinvest these savings to fund infrastructure, education, health care, or other capital improvement projects.
Advance refunding has saved state and local governments billions of dollars over decades, but has been unavailable to state and local governments since 2017.
The legislation is also cosponsored by U.S. Senators John Barrasso (R-WY), Michael Bennet (D-CO), Jim Inhofe (R-OK), Tammy Baldwin (D-WI), Shelley Moore Capito (R-WV), Bob Menendez (D-NJ), Jerry Moran (R-KS), Lisa Murkowski (R-AK), Chris Van Hollen (D-MD), Deb Fischer (R-NE), John Boozman, (R-AR), and Jacky Rosen (D-NV).
Among other organizations, the senators’ legislation is supported by: The National League of Cities, United States Conference of Mayors, National Association of Counties, National Conference of State Legislatures, American Hospital Association, American Public Power Association, American Society of Civil Engineers, American Public Works Association, National School Boards Association, Government Finance Officers Association, and National Association of Bond Lawyers.
Click here to read a one-page outline of the legislation.
Click here to view the full text of the legislation.
