There is a clear pressing need to invest in our nation’s infrastructure.

Municipal bonds finance the bridges, roads, schools and hospitals our communities rely on. We have an infrastructure spending shortfall and a critical need to address it. Further, there is a difference between funding and financing efforts.

SIFMA’s priorities in this space are effective financing tools with that have been used by over 50,000 state and local governments for key infrastructure projects. Municipal finance tools, such as tax-exempt advance refundings, can ease the burden on the American taxpayer through lower borrowing costs while also bolstering investment in critical public needs, enhancing the quality of life of all Americans. Direct pay bonds and updating small issuer rules will attract more private capital to state and local government projects, and, combined with advance refundings, will serve as critical infrastructure funding tools. It is a missed opportunity to not include municipal bond provisions in the Build Back Better Reconciliation Bill. State and local governments, unlike virtually everyone else in America, are unable to take full advantage of historically low interest rates through advance refundings and generate cash flow to reinvest in their communities.

SIFMA and its member firms support the preservation of the tax exemption for municipal bonds as well as four main initiatives that would help state and local governments finance important infrastructure projects while also saving taxpayer dollars:

1. Secure the passage of legislation permitting issuers to advance refund their municipal debt on a tax-exempt
   municipal basis;
2. Authorize a new direct payment bond program on a permanent basis;
3. Expand the volume cap and uses for Private Activity Bonds (PABs); and
4. Increase the annual limit on the amount of tax-exempt obligations that may be issued to qualify for the small issuer exception to the tax-exempt interest expense allocation rules.