Bill with GFOA Muni Priorities Reintroduced for the 118th Congress
The Local Infrastructure Financing Tools (LIFT) Act (H.R. 8396), reintroduced by Congresswoman Terri Sewell (AL-07), aims to expand bond financing opportunities for local governments and non-profits. The LIFT Act would provide flexible financing tools tailored to various community needs, such as transportation, public health facilities, schools, and other infrastructure and economic development projects.
Among the bill's provisions are two GFOA municipal finance priorities. First, is the increase of the small issuer exception to $30 million, with future increases tied to inflation. The existing $10 million cap on bank-qualified bonds has not kept pace with inflation or the costs associated with infrastructure projects over the years. Increasing this cap not only modernizes the program but also helps smaller governments save costs by issuing bank-qualified bonds, as they can avoid certain underwriting and transaction costs. Second, the bill seeks to reinstate tax-exempt advance refunding. The 2017 Tax Cuts and Jobs Act (TCJA) repealed this critical cost-savings tool for state and local governments and has limited the options to refinance debt, which could free up capital and be put to immediate public works purposes. Having the option to refinance debt is a valuable financial management tool, especially since interest rates will certainly fluctuate over the lifetime of outstanding governmental bonds (which in many cases is 30 years). Without tax-exempt advance refunding bonds, state and local governments will pay more in interest, a cost that must be paid by state and local taxpayers.
GFOA urges members to reach out to your Representative and ask them to cosponsor this vital piece of legislation.