What is a Tax Anticipation Note?
Tax anticipation notes are one type of notes that are issued by municipalities. Generally, the tax anticipation note is issued by a state or local government with the understanding that a certain amount of taxes will be collected within an appreciable period of time. The note allows the municipality to fund capital projects now rather than waiting for the actual collection of the taxes. Sometimes referred to as a tax anticipation warrant, the tax anticipation note is understood to be a short-term debt obligation. That is, the municipality is expected to have enough revenue in hand to cover the face value of the debt within a relatively short period of time. Generally, debt obligations of this nature are expected to be paid in full within no more than one calendar year. When a tax anticipation note is issued, the municipality typically is committing to three basic covenants. First, the face value of the note will represent funds that are channeled into a specific capital expenditure, su
