When Harrisburg, Penn., last week announced it would miss a payment on general obligation bonds, headlines once again centered on potential trouble with a wider swathe of the $2.8 trillion municipal bond market.

Pennsylvania's capital city on Wednesday said it would skip a $3.29 million payment on some city bonds, which are insured by Ambac (ABK) . Bondholders will get paid, but experts say the city's default will again raise the specter of widespread trouble in the muni market.

Harrisburg's default isn't a huge surprise. The city s well-publicized troubles are rooted in local political battles and linked to bonds for a failed garbage incinerator project that defaulted last year.

Experts say the city's plan to stick its bond insurer with the bill raises two issues. It focuses the debate on the extent of the muni bond crisis and highlights how difficult it is for investors to identify potential issues with individual credits before they become serious problems.

"Some pundits are already pointing to Harrisburg s action as the first domino in the widely forecasted collapse of municipal issuers," according to a recent report by Matt Fabian, director of research at Municipal Market Advisors.

However, Fabian and other muni bond experts don't see the dominos toppling. Alan Schankel, managing director for fixed income at Janney Montgomery Scott in Philadelphia, says Harrisburg's decision to default on the general obligation bonds is more a problem for the city than muni debt nationwide.

"This isn't the tip of the iceberg that's going to bring down the municipal market," he says. Harrisburg's city council had the option of raising certain fees and taxes in the wake of the 2009 incinerator bonds collapse, but did not.

"They probably could have made this payment," by adjusting the city budget, he says. "The fact of the matter is they made that decision and as a result they missed a payment."

Chuck Ardo, a spokesman for Harrisburg Mayor Linda Thompson, says the current administration inherited the incinerator's financial problems and a substantial budget deficit when she took office in 2009.

"I made the difficult decision to ask for a real estate tax and water rate increase to meet oncoming obligations" Thompson said in a statement posted to the city web site Sept. 1. "However, in adopting the budget, City Council eliminated the proposed increases and in doing so created a bigger 'hole' in the general fund. Now the chickens have come home to roost."

Schankel says the muni defaults that are often used to highlight the scope of troubled government-issued bonds all have some outstanding issue that pushed them into default. Vallejo and Bell, in California; Buena Vista, Va.; Menasha, Wisc.; and Jefferson County, Ala. issued bonds that weren't directly related to basic government operations, or adopted financing techniques that weren't typical, and that's why they've had trouble. He says there are plenty of financially strapped governments from the state level on down, and they're handling their muni debt payments by cutting other services, sometimes drastically.

"The problem are in communities that let themselves get into trouble with activities that they shouldn't have been doing in the first place, or lacked the expertise to be doing in the first place," Schankel says.

Predicting that sort of trouble before it hits the headlines is tricky, even for bond experts such as Fabian. Bond issuers have wide latitude in deciding what qualifies as a material impact on each credit, and they often don't disclose trouble until a payment will be missed or other serious troubles emerge.

"Not only does an actual event have to happen but the issuer has to judge it to be of actual interest to investors," Fabian says. "The the issuer has no incentive to disclose more their interest is to disclose less."

Thus, the disclosure reports on the Municipal Securities Rulemaking Board reporting web site, often known as EMMA, can be posted months after an actual disruptive event.

Robert Kane, chief executive officer of BondView, a New York municipal bond data tracking company, hails the Securities and Exchange Commission requirements that imposed quarterly reporting standards on a wider basis and more rigorous disclosure requirements on bonds issued since December, but he says it remains difficult for ordinary investors to spot the next Harrisburg before it s too late.

"The municipal bond market needs a better early warning system," he says. "The one that's in place is really not cutting it."