LOS ANGELES -- For the first year since 1991, demand from California issuers for a slice of the state's $1.56 billion in private-activity bond apportionments has outstripped supply.

The Tax Reform Act of 1986 separates tax-exempt municipal bonds into two basic categories: governmental use and private-activity bonds. The act sets an annual ceiling in every state, based on population, that limits the dollar volume of private-activity bonds that can be issued.

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