On June 21, GFOA led a coalition letter to House and Senate Budget Committee leaders to highlight the negative impact budget sequestration has had on issuers utilizing direct subsidy bonds (e.g. Build America Bonds issued from 2009-2011). The letter emphasized that these bonds were initially issued with the understanding that the federal subsidy payments to issuers under the program would not be subject to the federal appropriations or sequestration process. As we approach 2023, issuers of these bonds – at a minimum – face continued reductions in the subsidy payments through the end of this decade and potentially face total elimination of the payments unless Congress acts to waive the Pay as You Go Act (PAYGO) as it relates to budgetary effect of legislation passed in 2021.

• Publication date: June 2022