Why would a government issue revenue bonds (which generally are issued at a higher rate of interest than general obligation bonds)even though the government knows that if revenues from the project are not sufficient to cover principal and interest payments, the government will use resources from general government activities to fund the principal and interest payments?

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Revenue bonds have advantages over general obligation bonds such as not needing approval by voters and not being considered in legal debt limitations. Additionally, revenue bonds can allow for the interest costs to be passed on to the users of the project being financed, which can increase the likelihood of generating sufficient revenues to cover the principal and interest payments. Therefore, even though there is a risk of the government having to use resources from general government activities to fund the payments, the benefits of issuing revenue bonds may outweigh this potential risk.

Why Would a Government Issue Revenue Bonds (Which Generally Are