The big worry last summer was the possibility of states across the country defaulting on their debts.
Now it appears most states have turned the corner, and are seeing an uptick in their collections of sales and income taxes. This summer, the pressure is on local governments, like New York City's, which are struggling with cuts in state aid.
Josh Zeitz, a research analyst at the brokerage firm MF Global, said there are several reasons why local governments will feel more pain than state governments.
"Most states have actually balanced their budgets this year by making steep cuts to municipal and county aid," he said. "That's aid that goes directly to local governments, and by making steep cuts to public education, which is largely a local function."
Zeitz also breaks down how New York City is faring, and talks about some of the structural advantages and disadvantages it has over other localities.
Greek lawmakers have approved a new austerity plan that's needed to get an infusion of emergency loans. That pushed markets higher on Wednesday. The Dow rose 73 points, ending at 12,261. The Nasdaq added 11 points, closing at 2,740. The S&P 500 settled at 1,307, after gaining 11 points.