1.2.4.1 Current Fiscal Year Exception

1.2.4.1 Current Fiscal Year Exception

PREMISE – A debt obligation may be eligible for this exception if the public agency can pay the debt with funds it already has or will receive during the current fiscal year.

LEGAL REQUIREMENTS – A debt obligation must be payable solely from (1) amounts currently available to be appropriated in the public agency’s current year budget, or (2) revenues and income to be received in or for the fiscal year in which the obligation is incurred.

CAVEATS AND QUALIFICATIONS – The terms of the obligation should be clear that if the public agency’s income and revenues in the current fiscal year prove to be insufficient, the lender or debt holder has no further legal recourse.

COMMON APPLICATIONS IN THE PUBLIC FINANCE CONTEXT – This exception is commonly applied to tax and revenue anticipation notes (TRANs) and revenue anticipation notes (RANs). See Section 3.3.4, TRANs and RANs.