More bad news for state and municipal bonds

The Huge Threat To Muni Finances That Hardly Anyone Is Talking About Yet

Thanks to 60 Minutes, the public is starting to understand a problem that's been discussed in financial circles for a long time, namely the horrible state of muni finances.

But even within that discussion, one issue hasn't actually been discussed that much, and that's the effect of falling property prices on property taxes.

WSJ noted that property tax changes generally lag housing prices by about three years, due to the timing of assessments. So we've seen big hits to housing that haven't even shown up yet in tax receipts for cities.

16 US Cities Facing Bankruptcy If They Don't Make Deep Cuts In 2011