Yes, good point.
You can “war-game” a scenario in Chicago / Illinois where an economic downturn causes tax collection to drop significantly, causes large losses in poorly managed pensions, and financially blows-up state-run entities like, hospitals, toll roads, airports, etc... (also revealing deep corruption and mismanagement ).
If the solution isn’t bankruptcy, it then becomes entirely political - and judicial. Can you imagine what it would like having people like Kimm Foxx, Lori Lightfoot, Mike Madigan, Jesse Jackson, Rahm Emanuel etc... trying to manage cuts in services, selling new debt, and massively raising taxes? It would be utter chaos.
“and massively raising taxes”
which would depress housing prices and precipitate the flight of the well-to-do and retirees, further depressing housing prices and thus depressing both property and income tax receipts, which would then require even higher mil levies and income tax rates, which would ...
and then there would be businesses fleeing left and right due to massively higher taxes and deteriorating infrastructure and deteriorating services and increasing lawlessness, resulting in the need for even higher taxes, with more people fleeing due to joblessness, with further depression of property values,which would ...
yes, a full-blown economic and social death spiral would be precipitated and it would happen pretty darn quickly too once it got started ...