California needs bankruptcy. Easy money is enabling and funding their insane politics
Illinois is right behind CA in this area of mismanagement, but there the state constitution has a provision which forbids the reduction of public employee pensions. This was recently reaffirmed by the state supreme court. So, they cannot cut benefits to square the equation, they must raise taxes. They are f-----. As they raise taxes, people who have the discretion to leave (disproportionately high income folks) will do so and the problem falls more onerously on lower income folks. It is a tax death spiral.
I think that the most important aspect of this issue is that federal taxpayers be protected. The burden of fiscal mistakes that happened in a given state as the result of their foolish policies (e.g., CA prison dentist retiring at 55 with $257K pension for life) needs to stay in that state. You broke it, you bought it.