The municipal-bond market may expand next year for the first time since 2010 as states and localities step up borrowing, according to Bank of America Merrill Lynch.

The market is set to grow by an estimated $34 billion in 2015 as municipalities boost debt sales to pay for infrastructure projects, Philip Fischer, head of muni research in New York at Bank of America, said in a Nov. 7 report. Fischer projects issuance of $350 billion, up from about $330 billion this year.

“The deleveraging in the public sector should start to reverse itself as state and local revenues increase and support greater issuance,” Fischer said in a telephone interview.

Local officials contending with limited financial resources after the recession have been reluctant to borrow and take on new projects. The $3.7 trillion local-debt market is on track to shrink in 2014 for the fourth straight year, Federal Reserve data show. That trend may reverse in 2015 as municipal finances improve and governments borrow while interest rates remain close to generational lows, Fischer said.

In voting last week, states and localities asked for approval of $44 billion of bond measures for construction of roads, schools and water systems, the most for a November general election since 2008, according to Ipreo, a New York-based financial-market data provider. Voters passed about $37 billion.

Bank of America’s 2015 estimate includes $160 billion of debt that would raise new capital and $95 billion of advance refunding, where proceeds sit in escrow until the prior securities are repaid. The combined $255 billion will surpass the $221 billion that investors will receive in principal and interest payments, Fischer estimates.

States and cities have sold about $253 billion of long-term, fixed-rate debt this year, 3 percent less than at the same point of 2013, data compiled by Bloomberg show.

The market has earned 8.7 percent in 2014, on pace for the best year since 2011, according to Bank of America data.