The Feds giveth and the Feds taketh away

February 23, 2017

The Feds giveth and the Feds taketh away

The budget sequester means Illinois governments could lose hundreds of millions in federal bond subsidies


Governments in Illinois have been forced to spend tens of millions of dollars due to the loss of subsidies in a federal bond program, and could lose hundreds of millions more if the federal budget sequester remains in place, according to an analysis from the University of Illinois Institute of Government and Public Affairs.

The federal subsidies were part of the Build America Bond (BAB) program and helped governments seeking access to financing for capital projects offset their interest costs. But when the federal budget sequester was enacted in 2013, four years into the program, those subsidies were reduced, forcing governments to cover the difference themselves.

“This is just another financial challenge that Illinois governments have had to manage over the past few years and will have to manage in the years going forward,” Luby said. “The real concern is this is going to cost much more in the future if the sequester continues.”


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Research Area: Fiscal and Economic Policy

Policy Initiative: none