U.S. Sens. Roger Wicker, (R-MS) and Debbie Stabenow, (D-MI) and 15 colleagues recently reintroduced the Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act, which would advance infrastructure project refunding to manage bond debt and reduce borrowing costs for public initiatives.
Advance refunding is an accounting practice enabling state and local governments to refinance outstanding municipal bonds to more favorable borrowing rates or conditions before the end of the initial bond term.
“State and local governments often have to issue bonds to pay for important local infrastructure, but sky-high inflation has pushed borrowing costs through the roof,” Wicker said. “The LOCAL Infrastructure Act would provide relief by allowing municipalities to take advantage of lower interest rates as they become available, resulting in significant savings for these communities.”
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 the savings to fund infrastructure, education, health care or other capital improvement projects.
“Local communities in Michigan and across the country are now making some of the most significant investments in roads, bridges, water infrastructure, and high speed internet because of our work at the federal level to make a once-in a-generation investment in America’s infrastructure,” Stabenow said. “This bill lowers costs and gives local governments more flexibility through our federal tax code to invest in hospitals, roads, schools and other critical infrastructure.”