In January 2020, the House of Representatives majority developed a cross - Committee framework for infrastructure action. The sprawling policy proposal calls for over $760 billion dollars of investment over a 5 year period, a modest investment compared to the overall need. The framework includes several municipal bond provisions, these include:
- Advanced refundings - Restores State and local governments’ ability to invest in infrastructure projects with favorable financing terms by allowing them to use one bond’s proceeds to replace existing bonds.
- Direct Subsidy Bonds - Provides taxable bonds, such as Build America Bonds, that State and local governments can use to finance surface transportation projects while the bondholder receives a direct subsidy, rather than tax-free interest like municipal bonds.
- Qualified Private Activity Bonds - Expands the national volume cap for qualified highway or surface freight transfer facilities to allow for greater investment in surface transportation public-private partnerships.
- Tax Credit Bonds - Provides a taxable bond that State and local governments can use to finance surface transportation projects while the bondholder receives a tax credit, rather than tax-free interest like municipal bonds.
Moving Forward Framework
Rebuilding America's Infrastructure
The Trump Administration used its FY 2019 budget as an opportunity to promote vast infrastructure spending. The document titled, “Rebuilding Americas Infrastructure”addresses ways to permanently fix the Nation’s infrastructure deficit to improve quality of life and strengthen economic competitiveness. The framework includes:
- Private Activity Bonds - PABs., which often support regionally- and nationally-significant projects, would have broaden eligibility and flexibilities. The Budget estimates the cost of these policy expansions at $6 billion.
- Incentive Grants - $100 billion in competitive grants to applicants that demonstrate innovative approaches to generating new revenue streams, prioritizing maintenance, and modernizing procurement practices.
- Transformative Projects - $20 billion in competitive funding for commercially viable transformative projects that are capable of generating revenue, provide net public benefits, and would have a significant positive impact on the Nation, a region, State, or metropolitan area.
- Expand Federal Leveraging Programs - $14 billion in additional subsidy funding for key Federal credit programs that finance infrastructure projects, along with expanded eligibility to other sectors such as airports and ports.
- Federal Capital Revolving Fund - $10 billion to establish a mandatory revolving fund to finance purchases, construction, or renovation of Federally-owned civilian real property.
Jobs and Infrastructure Plan for America's Workers
In 2018, the Senate minority developed a sprawling spending plan to enhance infrastructure nationwide, while also putting an emphasis on overturning aspects of the 2017 Tax Cuts and jobs Act. The plan would create and a "Federal Infrastructure Financing Authority,” the plan would also create a new direct pay bond program:
- To ensure that State and local governments have flexibility to finance infrastructure projects as efficiently as possible, by eliminating arbitrary tax barriers for infrastructure projects that benefit the public.
- The creation a new direct-pay bond program for qualified infrastructure projects, deepening the lending market and allowing large investors, like pension funds, to more easily invest in rebuilding America’s infrastructure.
Think-Tank Policy Positions
Many influential Washington think-tanks have also recently weighed in on the topic of infrastructure. Below are several policy thought leaders position papers on the importance of including bond related provisions in any federal infrastructure package: