States can’t sue for bankruptcy but if a federal law allowed them to do so, federal bankruptcy provisions would take precedence over state laws that forbid revocation of union contracts. In our federal system, bankruptcy law is a federal matter and is uniform throughout the country.
Suppose a judge says you must pick up your house and move it a mile down the road. Will you do it? can you do it? In the case of the towns or States this “judge” decrees must continue to honor the very contracts which drove it to insolvency, how exactly would the States accomplish this. Where does the money come from? And when the State stops paying the union contracts because there is ZERO money to do so, what will the “judge” do then?
Some one once commented on a Supreme Court decision years and years ago saying (paraphrased), “Ok, they have issued a ruling, know let’s see them enforce it” and another one which goes, “How many divisions does the Supreme Court have to enforce the decision”?
Bills cannot be paid with no money and taxes cannot be continually raised without causing the economic activity from which the tax is taken to shrink. It’s the case of diminishing and then of negative returns.