Infrastructure and Municipal Finance

America’s infrastructure – its roads, bridges, schools, hospitals, and utilities – is central to economic growth and quality of life. Yet, the nation faces a persistent infrastructure investment shortfall, requiring innovative financing tools and strong public-private partnerships to close the gap.

Municipal bonds are the cornerstone of infrastructure finance, providing cost-effective capital for more than 50,000 state and local governments across the United States. These tools help communities modernize essential facilities while easing the burden on taxpayers through lower borrowing costs.

By the Numbers

Key Focus Areas

Preserving the Tax Exemption for Municipal Bonds

The federal tax exemption for municipal bonds remains one of the most effective mechanisms to finance public projects at reduced cost. SIFMA strongly supports maintaining this exemption to keep infrastructure investment affordable for communities nationwide.

Restoring Tax-Exempt Advance Refundings

State and local governments currently cannot take full advantage of historically low interest rates through tax-exempt advance refundings, which once allowed issuers to refinance outstanding debt and reinvest savings into their communities. Restoring this authority would unlock billions in reinvestment opportunities and strengthen local budgets.

Establishing a Permanent Direct Pay Bond Program

SIFMA supports creating a new, permanent direct pay bond program—similar to the successful Build America Bonds program—to attract additional private capital into infrastructure projects and broaden investor participation in municipal finance.

Expanding Private Activity Bonds (PABs)

Private Activity Bonds enable private investment in projects with significant public benefit, such as affordable housing, transportation, and water infrastructure. Expanding the volume cap and permissible uses for PABs would enhance public-private partnerships and accelerate project delivery.

Modernizing Small Issuer Rules

SIFMA advocates for increasing the annual limit on tax-exempt obligations that qualify for the small issuer exception to the tax-exempt interest expense allocation rules. Updating these limits would reduce administrative burdens, promote market access for smaller communities, and encourage reinvestment in local priorities.

The Bottom Line

Municipal bonds and other financing tools are critical to maintaining and modernizing America’s infrastructure. SIFMA is committed to preserving the tax exemption, restoring advance refundings, and promoting financing mechanisms that empower state and local governments to invest in their communities, strengthen the economy, and improve lives nationwide.