Historically, what have been the causes of municipal bankruptcies?

What will be an ideal response?

Municipal bonds are viewed as having little default risk. Moreover, cumulative default rates and recovery rates for investment-grade municipal bonds are better than for comparably rated corporate bonds. For example, according to Moody's, over the period of 1970 to 2005, the
10-year cumulative default rate was 2.23% for corporate bonds compared to 0.06% for comparably rated municipal bonds. Moreover, Moody's also reports that the average recovery rate was only 42% of par for corporate bonds that defaulted compared to 66% for defaulted municipal bonds.

Spiotto provides a history of municipal bond defaults as well as the causes and nature of defaults. These include:

Economic conditions: Defaults caused by downturns in the economy and high interest rates.
Nonessential services: Revenue bonds issued for services whose service was no longer needed.
Feasibility of projects and industries: Revenue bonds are issued after a feasibility study for
a project is completed. The feasibility study may have been too optimistic with respect to the demand for the project or the cost of completing the project.
Fraud: Municipal officials fail to comply with the terms of the relevant documents.
Mismanagement: Inability to successfully manage a project.
Unwillingness to pay: A municipality may simply be unwilling to pay (i.e., repudiation of the debt obligation).
Natural disasters: The impairment of a municipality's budget (reduction in revenue and increase in costs) may be the result of a natural disaster such as a hurricane.