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Carper, colleagues introduce LOCAL Infrastructure Act

Delaware News Desk
Smyrna/Clayton Sun-Times

Sens. Tom Carper, D-Delaware; Roger Wicker, R-Mississippi; Debbie Stabenow, D-Michigan; Shelley Moore Capito, R-West Virginia; Michael Bennet, D-Colorado; John Barrasso, R-Wyoming; Bob Menendez, D-New Jersey; and Jerry Moran, R-Kansas, introduced on July 1 the Lifting Our Communities through Advance Liquidity for Infrastructure — LOCAL Infrastructure — Act.

As the U.S. deals with the economic effects of the COVID-19 outbreak, 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.

“Today is July 1st, the day nearly all states and thousands of local governments begin their new fiscal year,” said Carper. “Unfortunately, this year, cities and states across this country won’t be starting off with a clean slate due to the unprecedented strain that the coronavirus pandemic has put on their budgets. As a former governor and state treasurer, I know what this lost revenue will mean for cities and states that were already stretched thin, especially when it comes to crucial infrastructure projects that help drive local and regional economies. It’s clear that states and local governments need access to every financing tool in the toolbox right now so that they don’t have to delay providing communities with clean water, safe roads, schools, parks, transit and other critical infrastructure. The LOCAL Infrastructure Act will help enable our communities to invest now in a stronger, safer, more connected future.”

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 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.

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.

Read a one-page outline of the legislation at bit.ly/2ZwTVA5; read the full legislation at bit.ly/38uM7Tz.