SB 1481, titled the “Lifting Our Communities through Advance Liquidity for Infrastructure Act” or the “LOCAL Infrastructure Act,” would amend the Internal Revenue Code of 1986 to reinstate the use of advance refunding bonds. Advance refunding allows state and local governments to refinance outstanding tax-exempt bonds before the original bonds’ call date, typically to take advantage of lower interest rates and reduce borrowing costs. The bill would repeal the changes made by section 13532 of Public Law 115-97 (the 2017 tax law) that eliminated this financing tool, restoring the prior law as if that repeal had never been enacted.
In practical terms, the bill would affect state and local governments, public authorities, and other municipal issuers that rely on tax-exempt debt to finance infrastructure projects such as schools, roads, water systems, and other public facilities. By restoring advance refunding, the measure could increase flexibility in debt management and potentially lower long-term financing costs for public infrastructure. Because the bill amends federal tax law, its effect would be nationwide and would operate through the Internal Revenue Code rather than through direct grants or appropriations.
Impact
The bill would restore a municipal finance provision removed by the 2017 Tax Cuts and Jobs Act, changing federal tax treatment of tax-exempt municipal bonds to permit advance refundings again. This would likely benefit state and local governments, school districts, transit agencies, utilities, and other public borrowers by expanding refinancing options and potentially reducing debt service costs. It would not directly create new spending programs, but it could affect federal tax revenues by changing the treatment of bond-related transactions.
Sentiment
The available context suggests generally favorable bipartisan sentiment. The bill was introduced by Senators from both parties, including Republicans and Democrats, which indicates cross-party support for restoring a financing tool used by public issuers. No committee transcript or recorded vote is provided, so there is no evidence in the record here of formal opposition or amendment debate.
Contention
The main policy issue is whether Congress should restore advance refunding bonds after their elimination in the 2017 tax law. Supporters are likely to emphasize lower borrowing costs, improved liquidity, and infrastructure financing flexibility for state and local governments. Potential critics may focus on the federal revenue cost of reinstating the provision or on whether tax-exempt financing should be expanded, but no specific objections are documented in the provided materials.