Regulators, armed with new powers under the Dodd-Frank Act, are pushing for greater financial disclosures by states, cities and other issuers, while redefining responsibilities of key players in the market.

At the same time, the core of the market -- tax-exempt debt -- is under siege.

"Unless the municipal market is strong and people feel confident (in it), state and local governments are not going to be able to finance their needs," said Richard Ravitch, who along with former Federal Reserve Chairman Paul Volcker, is heading a task force on the state budget crisis.

With more than $1 trillion in federal spending on the chopping block and possible changes in the federal tax code looming to deal with the U.S. deficit crisis, Ravitch, New York's former lieutenant governor, told the Securities Industry and Financial Markets Association's Municipal Bond Summit on Tuesday he has not seen any analysis of how these moves would affect the state and local government sector.