State budget battles are escalating, but the tax-exempt bond market seems to be taking the struggles in stride. Bond yields are close to their lowest levels since 1979.

Last Friday alone, we carried news stories about New Jersey, Florida, Iowa, and Oregon, all states that are moving, with varying success, toward completing their fiscal plans for the year ahead. Governors and state legislators are confronting the difficult choices needed to bring spending into line with revenue, and the bond market apparently approves.

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