Bill Would Reinstate Ability of Local, State Governments to Issue Tax-Exempt Advance Refunding Bonds

by Paul Ciampoli
APPA News Director
May 15, 2023

Sens. Roger Wicker (R-MS) and Debbie Stabenow (D-MI) last week introduced the Local Infrastructure Act (S. 1453), legislation that would amend the federal tax code to restore state and local governments’ ability to issue tax-exempt advance refunding bonds.

The bill is intended to be identical to S. 479 introduced by the two senators in the 117th Congress.

Advance refunding has saved state and local governments billions of dollars over decades but has been unavailable to state and local governments since 2017.

Additionally, the Wicker-Stabenow bill differs in construction from, but is identical in intent to, H.R. 1837, the Investing in Our Communities Act, introduced in March by Reps. David Kustoff (R-TN) and Dutch Ruppersberger (D-MD).  

Advance refunding is an accounting practice that allows state and local governments to refinance outstanding municipal bonds to more favorable borrowing rates or conditions before the end of the initial bond term.