The House of Representatives passed a bill last Tuesday to provide financial support to the Federal Highway Trust Fund which is expected to run out of money in August. The bill works as follows: corporate pension funding rules will be changed so that companies can set aside less money today to pay for future benefits. These companies will report higher taxable profits and pay more in taxes, generating additional revenue that will be diverted to the Federal Highway Trust Fund. Unfortunately this means that corporations will pay less taxes in the future when they have to increase their contributions to meet actuarial funding requirements. While the Bill will generate a one-time boost in tax revenues, it will also expose beneficiaries and taxpayers to the risk that a corporation becomes insolvent in the future after underfunding its pension plan and creates a built-in drag on future federal revenues. Failing to fully fund off-balance sheet liabilities is something that is all too common among municipal issuers. For example, our fiscal year 2013 State of the States study highlighted that unfunded pension liabilities are rising considerably faster than growth in all revenue sources. The passage of this Bill encourages corporations to kick the can down the road and push their financial responsibilities into the future, a short-sighted approach from the perspective of a bondholder. The passage of this legislation highlights why SNWAM has and will continue to view pension liabilities as hard liabilities that warrant continued monitoring.