California Muni Bond ETFs: A Reprieve For Now | ETF Trends

The parallel between California’s debt problems and that of Greece’s isn’t hard to notice. One thing California has going for it, though, to the relief of California municipal bond exchange traded fund (ETF) holders: the state isn’t expected to default anytime soon.

On May 14, Gov, Arnold Schwarzenegger updated his rather tight budget proposal to the legislature, according to The Economist. Despite the fact that after being adjusted for inflation and population growth, it’s smaller than ever, California still faces a budget deficit of around $17.9 billion in the current and coming fiscal years.

Schwarzenegger intends to reduce that amount without raising taxes and by implementing more cuts and some federal aid. [5 ETFs to Watch in Topsy-Turvy Markets.]

The governor is now reduced to eliminating state programs such as the welfare-to-work program, cash assistance to poor families with children, most state-subsidized child care and more. The governor is also castigating the over-generous state employee pensions, which is costing California more than $6 billion this year, or the equivalent of the programs being eliminated. [Muni Bond ETFs With An End Date.]