JLF Piedmont Triad Blog

Build America Bonds biting W-S in the butt?

Effects of sequestration in Winston-Salem:

Denise Bell, the city’s finance director, said sequestration may increase the city’s debt-payment costs for several Build America Bond issues. These types of bonds are eligible for interest-expense rebates from the federal government. Sequestration would reduce the rebates by 7.6 percent, she said in an email.

“The bonds were issued with an understanding that the federal government would stand by their commitment to provide a rebate of the interest costs. Governments were encouraged to issue these taxable bonds in order to get rebates of 35 percent to 45 percent of the interest costs. The alternative was to issue tax-exempt bonds at lower interest rates, but they were more expensive when compared to the BAB’s rates reduced by the rebates,” she said.

And we’re supposed to believe that the federal government will pay for 90 percent of Obamacare in perpetuity.

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