S.1481 - Lifting Our Communities through Advance Liquidity for Infrastructure Act; LOCAL Infrastructure Act (119th Congress)
Summary
S.1481, the LOCAL Infrastructure Act, aims to reinstate advance refunding bonds by repealing section 13532 of Public Law 115-97. This bill seeks to amend the Internal Revenue Code of 1986 to allow state and local governments to refinance existing debt at lower interest rates.
The bill is intended to provide communities with greater financial flexibility for infrastructure projects. It was introduced in the Senate on April 10, 2025, and referred to the Committee on Finance.
The Act's short title reflects its goal of "Lifting Our Communities through Advance Liquidity for Infrastructure Act."
Expected Effects
The reinstatement of advance refunding bonds would enable state and local governments to refinance their outstanding municipal bonds. This could result in significant cost savings due to lower interest rates.
These savings could then be redirected towards funding new infrastructure projects or other essential public services. The Act would essentially reverse a provision that previously restricted this refinancing option.
Potential Benefits
- Lower borrowing costs for state and local governments, freeing up funds for infrastructure projects.
- Increased investment in infrastructure improvements, leading to better roads, bridges, and public facilities.
- Potential for job creation in the construction and related industries.
- Enhanced financial stability for municipalities by reducing debt service payments.
- Improved efficiency in government spending by taking advantage of lower interest rates.
Potential Disadvantages
- Potential for increased overall debt if savings are not managed responsibly.
- Risk that some municipalities may over-leverage themselves, leading to financial difficulties.
- Complexity in the bond market could make it difficult for smaller municipalities to navigate the process.
- Possible arbitrage opportunities that could be exploited by financial institutions at the expense of taxpayers.
- The initial loss of tax revenue at the federal level due to the refunded bonds.
Constitutional Alignment
The bill appears to align with the Constitution, particularly the provisions related to the general welfare. Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States. By enabling states and localities to better manage their debt and invest in infrastructure, the bill could be argued to promote the general welfare.
However, the Tenth Amendment reserves powers not delegated to the federal government to the states. The federal government's involvement in municipal bond markets through tax policy could be seen as an indirect influence on state and local financial decisions, although this is a long-standing practice.
There are no apparent violations of individual rights or liberties as defined in the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).