President Biden is giving infrastructure legislation a top priority and a sense of urgency that his predecessors have not.
Public finance groups said Thursday that Biden’s speech to a joint session of Congress served as a reaffirmation that the new administration wants lawmakers to pass his infrastructure-oriented American Jobs Plan this year.
"Throughout our history, if you think about it, public investment in infrastructure has literally transformed America, our attitudes as well as our opportunities," Biden said in his speech Wednesday night. "The transcontinental railroad, the interstate highways, united two oceans and brought a totally new age of progress to the United States of America."
The president repeatedly linked his infrastructure proposals to job creation, mentioning the word "jobs" 40 times in his speech, according to the count taken by one news organization.
Biden called it "a once-in-a-generation investment in America" and "the largest jobs plan since World War II."
The Democratic-controlled House already has an infrastructure plan on the shelf from last year that includes tax changes that are favorable to the municipal finance sector.
However, public finance groups are not yet satisfied that the Biden administration has the same level of support for tax-exempt bonds.
“It would be very helpful if our friends in the White House and the Treasury made proposals on advance refunding, on bank-qualified and on direct pay bonds,” said Charles Samuels of Mintz Levin, counsel to the National Association of Health & Educational Facilities Finance Authorities.
Details of any administration proposals for tax-exempt bonds are expected to be contained in Treasury’s annual Green Book whenever that is released.
“The president’s speech aspirationally is exciting for people who want to see lots of economic development slash infrastructure activity, but it can’t be all just new bright shiny objects,” said Samuels. “The meat and potatoes of municipal finance cannot be neglected for any program to be effective.”
Ballard Spahr partner Teri Guarnaccia, the president of the National Association of Bond Lawyers, said her organization has been “encouraged by President Biden’s focus on jobs and infrastructure not just in last night’s speech, but in recent communications with both Republicans and Democrats in Congress.”
“We believe the municipal market can and should play a major role in reviving our economy post-pandemic,” Guarnaccia said. “We are also closely watching the bipartisan discussions surrounding the infrastructure debate and continue to believe that tax-advantaged bonds will be an integral part of any infrastructure package Congress ultimately passes.”
Brett Bolton, speaking for both the Bond Dealers of America and Municipal Bonds for America, said the two groups “remain optimistic about municipal bonds provisions being included as part of the Biden administration’s Build Back Better initiative.”
“We continue to work with our partners on both the House and Senate side, as well with the administration, advocating for the common sense and bipartisan provisions such as those included in the recently introduced LIFT Act and several companion pieces in the Senate,” Bolton said.
The LIFT Act is an acronym for Local Infrastructure Financing Tools Act which would restore direct pay bonds similar to the Build America Bonds program; reinstate tax-exempt advance refundings for municipal debt; and expand the use of bank-qualified debt.
The lead sponsor is Rep. Terri Sewell, D-Ala., a member of the House Way and Means Committee.
Emily Brock, director of the federal liaison center for the Government Finance Officers Association, said she considered education, childcare and nutrition among the highlights of Biden’s speech.
Bock said GFOA members were surprised that Biden did not mention the federal tax deduction for state and local taxes.
Enacting a repeal of the $10,000 cap on the SALT deduction that was enacted during the Trump administration is a priority for GFOA members.
Tom Kozlik, head of municipal strategy and credit at HilltopSecurities, questioned whether Biden can see his entire agenda enacted given that it totals around $6 trillion, counting the $1.9 trillion American Rescue Plan enacted earlier this year.
“My first take is the numbers are huge,” said Kozlik, noting that it remains to be seen how much of the remaining $4 trillion is doable.
“Are they going to be able to do some of, or a good portion of this $4 trillion in the same way they did the $1.9 trillion?” he asked. “Or are they going to be able to get enough Republican support to get something close to this? It doesn’t seem to me that they are going to be able to get significant Republican support.”
Kolzlik said the $568 billion counter offer by Senate Republicans to Biden’s more than $2 trillion American Jobs plan is “not only in different ballparks, they are in different ballparks that are in different cities.”
