(A non-technical/non-legal overview)
“Tax-exempt municipal leasing” is sometimes misunderstood. It is an umbrella phrase that applies to state, county, and municipal governments, special districts, and authorities, not just municipalities. (very generally, entities funded with tax dollars).
“Tax-exempt” municipal leases and municipal bonds are financial “first cousins.” Both are very low-cost methods of financing created by the IRS as incentives for financial institutions and investors to provide very low-interest financing for qualifying governments to acquire essential-use equipment including vehicles, hardware, software, police & fire stations, jails, and maintenance facilities. The financial institutions get valuable tax exemptions, while governments like yours reap the benefits of below-market interest rates. (The tax-exemption not related to sales, use or other taxes a government is otherwise obligated to pay.)
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