There are still plenty of concerns I have about munis. All things appear to be getting better on the muni front, but it is very possible that the Federal Govt will be making some serious cuts in their budget (like for Medicaid) that could force more financial responsibility onto the states. We could see states facing additional costs as the Feds looks for places to cut. If the Feds bow-out the states could endup "holding the bag" on some cost cuts at the Federal level. If the Feds cut like Republicans want them to in 2012 budget, we should expect some higher costs out at the state as they try to pick-up the slack.
Which is why I've been buying muni bond funds. In my IRA no less. They're down 10-20% due to fears that were based on revenues from the depths of the recession. It's a hedge against the broader (stock) market. If the market pulls back this summer while the states are showing progress against budget deficits, those bond funds might get a 5-20% pop. In which case, I'll liquidate the bond-fund holdings and use the proceeds to buy discounted stocks.
In the meanwhile, some states -- CA is one -- aren't even issuing new debt. That means the existing notes may become a scarce commodity, which may drive prices higher.