If the new infrastructure will lead to a larger GDP growth than the interest and maintenance, then I don't think anybody can argue that taking the loan is bad. No, the municipality can't use excess revenues, because those will not exist if not enabled by the infrastructure.

There is an obvious catch, but this uncritical "debt is baaad" rationale does not stand.

> The debt still has to be paid back with interest

That's true but kinda also not true. There has to be the possibility that the debt is to be paid back. More important: the interests have to be payed. Rest is cashflow management.

Hypothetically more infrastructure would mean more taxes and so one. Like in SimCity.

Just think of it this way: where does the money comes from that the state makes? If it is not spend the state has all the money but no one else.

It's more like activa and pasica on a balance sheet

I found the best way to play Sim City was to take a loan at the start. Then pause the game while zoning a lot and building a power plant. You need the economy to go Fast when unpaused in order to repay the loan. Then play debt free.

That's what debt is for - short term improvement for longer term gain. The notion of continually refinancing debt only serves the lenders.

And who are the lenders?

Aren't the lenders your citizens? You would argue that they are the big banks. Ok but who works there? Your citizens? And yes the pay taxes.

Who do the banks lend money to? Companies and citizens who in turn create tax revenue.

You don't run the state like a company. Where would your profit come from?

You are applying newton's physics to the solar system. It works approximately good - but some things are odd and won't fit until you have a big problem and everything unhinges