This afternoon, Senate Majority Leader Schumer is expected to bring the bipartisan infrastructure agreement to the floor for a vote of cloture, a vote that would advance the agreement to debate in its current state without legislative text. This vote is expected to fall short of the needed 60 votes to advance.
Senate negotiators continue to press Leadership to delay the vote to next week, however, at this time it appears that the vote remains on track for today.
Following the likely failed vote of cloture this afternoon, negotiators will continue to press forward to find a compromise on pay-for and will likely pursue another cloture vote on Monday. While that seems to be a more reasonable timeline, it is likely on a sliding scale, meaning this portion of the deliberations may leak further into next week. With August recess rapidly approaching, and Congressional Democrats also pursuing a massive reconciliation infrastructure package, the recess may be delayed for further work.
The BDA and MBFA have concerns about the potential bipartisan agreement as a viable path forward seem unstable. We still believe the chances of a broader infrastructure spending package will pass this year remain high by the budget reconciliation process, and the smaller surface transportation reauthorization, the INVEST in America Act, will be touted as a “bipartisan infrastructure success” leading to multiple opportunities to pursue municipal market priorities.
Below are our updated legislative expectations for BDA and MBFA priorities.
Expectations for Municipals and Infrastructure
New Direct Pay Bond Exempt from Sequestration
Included in the bipartisan infrastructure agreement, a new category of tax-preferred financing for state and local governments to be known as American Infrastructure Bonds (AIBs). Similar to the previous Build America Bonds program, AIBs would be an alternative to tax-exempt financing. The Senate American Infrastructure Bond is exempt from sequestration and has a flat 28% reimbursement rate while the House is not while varied reimbursement. There is a general consensus that the new AIB will be included in any infrastructure package passed, however, sequestration provisions and reimbursement rates remain in flux.
**Included in Bipartisan Infrastructure Agreement
Expand the Usage of PAB’s
As a priority for the Administration, the expansion of PABs for transportation purposes was included in the initial bipartisan agreement. This follows the calls from the Biden Administration for an increase in the PAB limit for transportation infrastructure, doubling the limit to $30 billion dollars. There is legislation in the Senate that would expand the usage of affordable housing amongst other provisions. PABs for GSE use has also been a popular discussion item, but little legislative text has been produced and this has yet to be tied to the existing proposal.
** Included in Bipartisan Infrastructure Agreement
Restoration Tax-Exempt Advance Refundings
As a top legislative priority for the municipal market, the restoration of tax-exempt advance refundings remains in a strong position for advancement this year. The legislative text was reintroduced by the House Municipal Finance Caucus earlier this year (the bill was identical to the version introduced in the 116th Congress) and absorbed in the later introduced LIFT Act. Thus far, some Senate Republicans have balked at this provision as they have vowed not to reverse any portion of the Tax Cuts and Jobs Act in which AR revoked.
**Not Included in Bipartisan Infrastructure Agreement-Slight Possibility for Inclusion in Final Draft–Stronger Likelihood for Inclusion in potential Reconciliation Infrastructure Package
Raise BQ Debt Limit
Much like AR, legislation was introduced in the House this Congress and absorbed into the LIFT Act. However, there has yet to be a Senate companion introduced, a potential hurdle in advancement.
**Not Included in Bipartisan Infrastructure Agreement–Slight Possibility for Inclusion in Final Draft–Average Likelihood for Inclusion in Reconciliation Infrastructure Package