Exchange traded funds that invest in municipal bonds have bounced back somewhat after stumbling badly in late 2010 when a noted analyst predicted hundreds of billions of dollars of defaults.
Yet muni bond ETFs fell last week as investors mulled news that Minnesota was forced to resort to shutting down regular operations over the Fourth of July weekend.
Unable to come to a budget accord, the Minnesota governing body closed most of the state’s governmental bodies last Friday, operating bare minimum services over the holiday weekend, reports Tami Luhby for CNNMoney. Governor Mark Dayton and Republican lawmakers who control the legislature stand at an impasse with no outlined schedule for talks over the remaining $1.4 billion deficit.
State parks were closed, highway stops were shutdown, road construction projects were put on hold and licensing for teachers and businesses ceased, among other things. Around 23,000 state workers are slated to be laid off, but they will be able to return once the budgetary problems are rectified.
Adding to states’ financial woes, New Jersey is looking to acquire a $2.25 billion bank loan from JPMorgan Chase & Co. (NYSE: JPM) to shore up the growing revenue deficit for its new fiscal year, writes Darrell Preston for Bloomberg. [Stock ETFs Hold the Line Despite Bearish Headwinds.]