WASHINGTON - Municipal market participants are warning that the federal government may have underestimated the revenue impacts of the Build America Bonds program so that it is far more costly than anticipated. They also are concerned that issuers may not receive federal payments under the direct-pay BAB program if they are used to "offset" taxes or other money owed to the government.

The BAB program, which was authorized by the stimulus law enacted in February, allows municipal issuers to sell an unlimited amount of taxable debt in 2009 and 2010 and either receive a direct cash payment from the federal government or have the government provide investors with a tax credit.

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