Last week, President Biden signed into law the American Rescue Plan Act, a robust $1.9 trillion dollar stimulus package that has monopolized the Administrations’s first 100 days agenda. While no muni provisions were included in the final package, the bill did direct $350 billion of unencumbered funding to state and local governments.
All indications are that Washington will now turn its attention towards infrastructure and likely muni financing provisions, but real questions on timing and scope remain. This week Speaker Pelosi directed House Committee Chairs to begin working with their colleagues from across the aisle to draft priorities for this potential package and to continue to pursue a bipartisan path. But in the current state of politics in Washington, DC a broad bipartisan bill seems unattainable. This would leave Congressional and Administration leaders to pursue yet another massive budget reconciliation bill, a controversial yet easier path to passage.
Following the introduction of the LOCAL Infrastructure Act in the Senate, companion legislation is in the works on the House side, as well many other BDA and MBFA priority legislation is expected to be introduced in the coming weeks.
Muni provisions are well-positioned for inclusion in the initial House infrastructure draft regardless of which legislative path Congressional leaders choose. However, a bipartisan approach remains the best option to avoid mandatary 10-year budget restrictions to avoid offsets that could complicate provisions such as tax-exempt advance refunding as the 10-year budget window expires.
Congressional Leadership has placed an early summer timeline on introduction and passage by the July 4th holiday, however, we would not be surprised to see the timeline slip into early fall 2021.
**As part of our BondingTime podcast series, the BDA hosts a bi-weekly DC Update with other Public Finance Network (PFN) advocacy groups, discusses a range of muni legislative topics, and provides instant reactions to legislative activity.
All BondingTime episodes can be found here.
House Ways and Means Debates Muni Provisions
Last week, the House Ways and Means Subcommittee on Select Revenue Measures hosted a hearing titled, Tax Tools to Help Local Government. The hearing, while covering a broad range of state and local tax issues, focused mainly on municipal bonds and steps the Committee can take to strengthen and broaden the use of that tool.
**The Municipal Bonds for America Council (MBFA) plans to submit a Statement for the Record in response to the hearing.
While the hearing covered many state and local tax issues, municipal bonds were the centerpiece of the discussion. The Committee, while acknowledging their jurisdiction may be limited in the broader infrastructure debates, focused on many tax issues including a deep dive on municipal bonds provisions laid out in the 116th Congress H.R. 2 the Moving Forward Act.
This hearing is the first in an expected series of hearings this spring leading up to the introduction of an infrastructure package.
Many BDA and MBFA priories were discussed including: