What term describes municipal revenue bonds that the state pays if revenues fall short?

Moral obligation bonds are a specific type of municipal bond that are backed by a promise from the state or local government to provide financial support if the revenues generated from the bond's specific project fall short of what is needed to meet debt obligations. While these bonds do not guarantee repayment in the same way that general obligation bonds do, they carry a "moral obligation" for the government to step in if necessary, thus providing a level of security to bondholders. This commitment is often informal and based more on the reputation and commitment of the government rather than a legally binding obligation.

Understanding this concept is important because it illustrates the varying levels of risk associated with different types of municipal bonds. Double-barreled bonds are backed by two sources of revenue, typically including both the revenue from the project itself and the taxing power of the municipality, but this is different from the moral obligation framework, which lacks that direct dual backing. Bond anticipation notes are short-term instruments typically used to raise funds until long-term financing is arranged, and limited tax bonds are repaid from a defined group of taxes. While each of these concepts is relevant to the realm of municipal finance, moral obligation bonds specifically encapsulate the idea of state intervention in case of revenue shortfalls.