Public finance law includes state and federal laws and regulations governing the financing of public organizations and projects. For example, public finance laws and regulations govern the sale and purchase of bonds to build or improve schools, parks, roads, airports, cultural facilities, recreational facilities, entertainment venues (sports arenas), and other public works projects.

Bonds are debts issued by governments (the debtor), for example, to purchasers of the bonds (the creditors), with a promise to pay the bondholder interest (a coupon) and repay the principal amount upon a certain date (maturity date)—similar to an IOU or loan agreement. Bonds are securities that can often be traded (bought and sold) to and from others on the secondary market.

In Massachusetts, public finance law is governed by both state statutes and federal regulations. The state laws regulate the issuance of bonds by public entities such as state and local governments, school districts, and other public agencies for the purpose of funding public projects like schools, parks, roads, and cultural facilities. These bonds are essentially loans made by investors to the issuing public entity, which agrees to pay back the principal with interest by a specified maturity date. The Massachusetts State Finance and Governance Board (MSFGB) oversees the issuance of state bonds, while local governments have their own procedures and regulations for bond issuance, subject to state law. Additionally, the sale and trading of these bonds in the secondary market are regulated by federal entities such as the Securities and Exchange Commission (SEC) to ensure transparency and protect investors. The Internal Revenue Service (IRS) also has regulations in place regarding the tax-exempt status of certain municipal bonds. It is important for entities involved in the issuance and trading of municipal bonds to comply with both state and federal regulations to ensure the legality and fiscal responsibility of public finance activities.