Replying to a message of Robert G Lewis to John Beamish:

 RGL> From: "Robert G Lewis" 

 RGL>  I don't think that states can declare bankruptcy but I
 RGL> could be wrong.

They can.  California did for all practical purposes several years ago when
it ran out of money a couple of months before the start of the next fiscal
year.  The state issued 'warrants' (essentially marketable IOUs but not the
same thing as a bond) in place of checks (especially PAYchecks) for four to
six weeks and begged the state's banks to accept them in lieu of real
money; the banks did, but discounted them from face value.

If any governmental entity were to formally declare bankruptcy, regardless
of how the creditors came out that state's credit rating would be so bad
they couldn't AFFORD to borrow money again.  And quite likely the ratings
of the government subdivisions within the state would also suffer.

 RGL> Texas does have some major funding problems right now though
 RGL> as do most of the states. Part of the problem is due to cutting back
 RGL> on taxes. New Jersey actually borrowed money for tax relief under
 RGL> the previous administration.

Here it seems to be a shortfall in taxes.  People just aren't buying as
much as they have been and sales tax revenue is down in almost every part
of the state.  Jobs are vanishing, too, and that affects the income tax
revenue.  The governor and state legislature are presently fighting about
who's responsible and what they're going to do about it (closing the State
Pen is one option on the table).

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