Unless the state’s constitution prohibits the state from declaring bankruptcy. NYS’s does. And a recent vote to call for a constitutional convention that might have changed that went down in flames thanks, you guessed it, to public employees.
At some point, “no more money” means no more money.
We do have a completely fiat, printed, centrally-planned monetary system - so there’s always money printing.
What I can envision is government deficits of $2-3 Trillion or more (we got to $1 Trillion without hardly a peep from the markets) comprised of monetized Fed.gov bonds and Quantitative Easing. This money will be used to “bail out” insolvent pension funds and States with vague promises of reform.