“CA and IL can declare BK.”
there’s no constitutional or statutory provision for a state to declare bankruptcy, so no, a U.S. state cannot declare bankruptcy.
What should happen is they lose their statehood and become a territory again with a provisional Governor appointed by the President and approved by Congress. The Governor would have to start creating a new constitution for the state and current legislators and districts would be disbanded. Let that happen to a couple of states and see how quickly they start getting their finances in order.