Members of the House Ways and Means Committee on Wednesday highlighted a number of bipartisan bills they are sponsoring that would increase the number of municipal financing tools available for financing infrastructure.
The proposals include increasing the amount of tax-exempt debt that can be used for a bank-qualified issuance to $30 million, expanding and permanently renewing the New Markets Tax Credit, and restoration of tax-exempt advance refundings.
Rep. Richard Neal, D-Mass., the committee chairman, also called for reviving direct-pay Build America Bonds, which he described as a resounding success when they were authorized in 2009.
Michigan State Treasurer Rachel Eubanks, who testified on behalf of the National Association of State Treasurers, agreed with Neal by observing that BABs attracted “a completely new class of investors.”
BABs received bipartisan endorsement a day earlier at a Senate Finance Committee hearing on the same topic, which raises the likelihood that direct-pay bonds will be included in any infrastructure legislation that is enacted this year.
Throughout the hearing Wednesday there were alternating flashes of bipartisan agreement on various financing tools that could be used that were overshadowed by partisan conflict over how to pay for the legislation.
On the bipartisan front, Rep. Mike Thompson, D-Calif., voiced agreement with the ranking Republican Rep. Kevin Brady of Texas on expanding the use of public-private partnerships.
But Rep. Earl Blumenauer, D-Ore., said he took “modest exception” to Brady’s call for more transparency.
The elimination of tax-exempt advance refunding as a municipal financing tool was included in the 2017 Tax Cuts and Jobs Act by congressional Republicans without even a public discussion, Blumenauer said.
Blumenauer said Republicans are refusing to alter the 2017 tax legislation, but “the public supports having the largest corporations pay a little more.”
Democratic Rep. Brian Higgins of New York also criticized the $2 trillion 2017 tax legislation for not providing the return on investment that infrastructure legislation would have produced.
Democratic Rep. Lloyd Doggett of Texas cited former President Trump’s failed promise to enact infrastructure legislation. He attributed that failure to the refusal of Republicans to pay for it.
Democrats also highlighted the elimination of tax-exempt advance refundings.
When Rep. Terri Sewell, D-Ala., asked Eubanks for the No. 1 thing Congress could do to make her job easier, Eubanks said it would be restoration of the tax exemption for advance refundings.
Eubanks quantified the value of that tool in her opening testimony as $771 million in savings for the state of Michigan, its local governments and school districts from 2007 through 2017. Those savings came from more than 586 advance refundings for more than $15.4 billion in bond issues.
“In that same time, state and local governments across the nation issued more than 12,000 advanced refunding bonds to save a minimum of $18 billion in borrowing costs,” Eubanks said.
“Restoring the ability to advance refund tax exempt municipal bonds would be the most effective financing tool for spurring additional sustainable and continued infrastructure investment,” Eubanks added.
