What is a common goal of issuing tax anticipation notes?

Issuing tax anticipation notes primarily serves the purpose of managing short-term cash flow. These notes are short-term debt instruments issued by municipalities expecting to receive tax revenues in the near future. By issuing these notes, the municipality can obtain immediate cash to cover expenses and obligations while waiting for tax payments to be collected. This allows for the smooth operation of government functions without interruption, ensuring that services are maintained and financial stability is preserved during periods of fluctuating cash flow.

Long-term financing involves different instruments that focus on extended repayment periods and larger capital projects, making it distinct from the short-term objectives of tax anticipation notes. Diversifying investment portfolios typically refers to managing a collection of investments to mitigate risk, which is not the goal of issuing tax anticipation notes. Reducing tax rates is a policy decision that influences revenue rather than a direct objective of utilizing these notes, which are meant to smooth out short-term discrepancies in revenue timing.