Tax Anticipation Note - TAN

See: Revenue Anticipation Note - RAN.

So...how can you not anticipate paying taxes?

Tax anticipation notes rely on the fact that the city will collect $X in taxes so many months from now. The muni needs the dough today, not tomorrow. What can they do about it? Well...they have really high certainty that the city will still exist in three months. They know that the tidal wave of cash will come in right around April 14, when most real estate taxes are due. So, in anticipation of that tidal wave of cash, the city issues bonds today using that expected tax money as collateral so that they can pay for stuff today.

Probably sounds goofy to have to go through all these gymnastics just to pay the bills only three months out, but sadly, many of America's cities have horrifically bad financial managers at the till, bad mayors, bad governance and/or just bad financial situations where something went wrong up the food chain to make them feel so forced to raise cash in this semi-urgent and likely expensive-transaction-cost manner.

But...they do. And investors are happy to make decent bond spreads on the investments, so this type of funding will continue until our cities look more like Dubai's than America's.