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Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Sequester Percentage 8.7% 7.2% 7.1% 6.8% 6.9% 6.4% 6.1% 5.8% 5.5% 5.5% 5.5% 5.5% 5.5% Sequester ($millions) 171 312 301 285 260 230 208 188 169 161 153 145 138 Sources:2013 through 2017 sequestration data from the Office of Management and Budget;2018 through 2025 sequestration estimates are based on Congressional Budget Office estimates of sequestration percentages with APPA calculations of likely BAB volume outstanding. payments and other refundable credit payments are"compa- American Public Power Association Position rable"under the law.'OMB's interpretation was certainly not Congress clearly did not intend for BAB credit payments to be intended by the congressional authors of the BAB.7 subject to sequestration. Likewise,it is clearly a"breach of con- Because of OMB's decision,BAB credit payments made after tract"for bond issuers to have negotiated financial deals based March 31,2013,through the end of fiscal year 2013 were cut on the promise of a payment on which the federal government by 8.7 percent. In other words,instead of receiving a payment is now reneging.BAB-financed investments in power genera- equal to 35 percent of the interest paid to bond holders,BAB tion,distribution,and system improvements shored up critical issuers received a payment equal to 32 percent of interest paid infrastructure at a time when traditional tax-exempt bond inves- BAB bond holders.Since March 2013,BAB payments have tors were in short supply and state and local government access been cut by$1.069 billion.APPA estimates that BABs payments to the municipal bond markets was impaired.It is unfair for the will be cut by another roughly$1.7 billion between 2017 and federal government to decide by fiat to renegotiate the terms of 2025.8 those deals.Every dollar cut means one dollar less that is avail- Finally,BAB credit payments could face an increase in the able to build power plants,power lines,and systems needed to percentage amount of sequestration.The Statutory Pay-as-You- continue to deliver electric power to public power's customers. Go Act of 2010 requires that revenue or mandatory spending Every dollar cut also represents a dollar more that public power laws must not increase federal budget deficits.This"Pay-as- utilities'customers must pay to receive such power. You-Go"requirement is enforced through sequestration—in OMB should reconsider its narrow reading of the budget law this case,solely of mandatory spending items(including BAB and decide to exempt BAB credit payments from sequestration. credit payments).A failure to meet Pay-as-You-Go requirements If OMB refuses to do so,Congress should act to prevent further would increase the percentage cut from BAB credit payments. BAB credit payment cuts and protect any future tax credit bond 6Tax Exempt and Taxable Government Bonds:Hearing before the H.Sub- or direct payment bond programs from sequestration. comm.On Select Revenues of the H.Comm.on Ways&Means,111th Cong. 12(2009)(Serial No. 111-22)(Statement of Alan B.Krueger,Assistant Sec'y.of Treasury of the United States). American Public Power Association Contact 'John Buckley,Remarks at the Urban-Brookings Tax Policy Center and George John Godfrey,Senior Government Relations Director, Mason Center for State and Local Government Leadership panel discussion Fall- 202-467-2929/jgodfrey@publicpower.org out from Federal Tax Reform:Implications for State and Local Revenues(Sept. 21,2012)(http://www.taxpolicycenter.org/events/federal-tax-reform-and-the- states.cfm)(Buckley,who as chief tax counsel for the House Ways and Means Committee helped write the BAB provision in ARRA,called OMB's decision The American Public Power Association is the voice of "extraordinary and strange"). not-for-profit,community-owned utilities that power 'APPA estimates based on prior year sequestration and estimates provided in 2,000 towns and cities nationwide.We represent pub Cong.Budget Office,Estimated Impact of Automatic Budget Enforcement Pro- lic power before the federal government to protect the cedures Specified in the Budget Control Act,at 8(Sept.12,2011).a Statutory interests of the more than 49 million people that public Pay-as-You-Go Act of 2010,Pub.L.No.111-139(124 Stat.8)(codified as 2 power utilities serve,and the 93,000 people they em- U.S.C.931). ploy.Our association advocates and advises on electricity policy,technology,trends,training,and operations. Our members strengthen their communities by providing superior service,engaging citizens,and instilling pride in community-owned power. 64 PubLicPower.org 246