A new class of direct-pay taxable municipal bonds would be created under a bipartisan bill introduced by U.S. Sen. Roger Wicker (R-MS).
The American Infrastructure Bonds Act, S. 1695, which Sen. Wicker sponsored on May 18 alongside seven original cosponsors, aims to boost investment in infrastructure and other public projects by providing affordable access to the large taxable bond market, according to a bill summary provided by the senator’s staff.
“Letting local leaders make decisions for their own communities is a great way to support economic growth,” Sen. Wicker said. “The American Infrastructure Bonds Act would improve upon previous efforts to expand options for public financing and provide support for vital projects.”
Under S. 1695, the bonds would be modeled as a direct-pay taxable bond, with the U.S. Treasury paying a percentage of the bond’s interest to the issuing entity to reduce costs for state and local governments. The payments would be issued for projects at 28 percent of the bond’s interest, the summary says.
“The Bipartisan Infrastructure Law was an important step to rebuild America’s roads and bridges, but there’s a lot more we need to do,” said U.S. Sen. Michael Bennet (D-CO), the lead original cosponsor of S. 1695. “The American Infrastructure Bonds Act is a bipartisan proposal to attract greater support for infrastructure projects across the country – especially in rural and underserved communities.”
If enacted, the measure would allow state and local governments to issue taxable bonds for any public expenditure that would be eligible to be financed by tax-exempt bonds, according to the summary, which notes that the bonds could be used to support a variety of infrastructure projects, including roads, bridges, water systems, and broadband internet.
The bill has been referred for consideration to the U.S. Senate Finance Committee.