Municipal Capital Market Improvement Act - Sets forth the findings of Congress that the municipal capital markets are unable to provide needed capital at reasonable interest rates at all times, that such markets are subject to cyclical instability, and that the Federal Government does not presently provide efficient financial assistance to State and local governments. Defines terms as used in this Act. Authorizes the Secretary of Housing and Urban Development to provide interest subsidy payments to State or local public bodies which elect to issue a taxable obligation. Provides that such payments shall be sufficient to pay 40 percent of the net annual interest cost per annum of the obligation. Disallows such subsidy payment with respect to any State or local obligation for which the United States or any agency or instrumentality thereof makes any payment of interest on such obligation pursuant to a guarantee. Establishes the Municipal Technical Assistance Office within the Department of Housing and Urban Development. Authorizes the Office to provide technical assistance to State and local governments concerning municipal capital market management and budget planning and to carry out research to facilitate the exchange among State and local governments of advanced concepts of municipal growth and development. Requires the Secretary to report to Congress each year concerning the administration of his functions under this Act.