Emergency COVID-19 Tax Anticipation Note Financing
November 23, 2020
Even as vaccine trials have provided hope that the Coronavirus (COVID-19) will soon no longer dominate the public consciousness, countless local governments throughout the Commonwealth of Pennsylvania face budget shortfalls due to COVID-19. In response, the Pennsylvania General Assembly passed a bill (HB 2536) which provides a temporary mechanism for local governments to ease budgetary pressures. Once signed into law by the Governor, the bill authorizes a local government to borrow money to cover anticipated budget shortfalls as described below.
The bill allows local governments to issue tax anticipation notes (TANs) that mature at the end of the local government’s 2022 fiscal year. Previously, local governments could only issue TANs that matured no later than the end of the local government’s current fiscal year. While the facts and circumstances applicable to each local government will need to be analyzed, it is probable most TANs can be issued on a tax-exempt basis.
This Public Finance Alert is intended to keep readers current on developments in the law. It is not intended to be legal advice. Feel free to consult a member of Eckert Seamans’ Public Finance team, or any other attorney at Eckert Seamans.