WASHINGTON--Paying a penalty under the arbitrage rebate relief law may be far more costly for state and local issuers than rebating the arbitrage, a consultant from a major accounting firm warned public finance officials meeting in Orlando.

"Be sure you understand that the consequences of the penalty can be unfortunate and not real popular with your board of county commissioners," cautioned Margaret Purcell, manager of Ernst & Young's national capital markets group in Jacksonville.

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