Analysts expect the cautious environment will persist, with municipal bond issuance to dip to as low as $175 billion in 2017. Tom Kozlik and Alan Schankel, analysts for Janney Montgomery Scott LLC, attribute the lack of enthusiasm for state spending to the risk of rising rates, austerity measures, high fixed costs for locak governments and lack of support for public works.

“There is nothing politically sexy about infrastructure spending,” Kozlik and Schankel said in a report.

Jamison Feheley, head of banking for public finance at J.P. Morgan Chase, believes officials are pushing off spending on anything that is not critical to public safety for at least a year or two until the economy improves.

Broad municipal bond ETFs like MUB include debt issued for a range of municipal projects. For instance, MUB includes 22.7% in transportation, 17.0% utilities, 3.9% school districts, 3.7% education, 3.3% improvement and 2.2% building, among others.

For more information on the munis market, visit our municipal bonds category.

Max Chen contributed to this article.