Well so far they have ruled Cities and counties can not states.....but that still doesn't change the economics.
You didn't think Illinois crawled out of Insolvency now do you?
As Illinois' fiscal crisis deepens, the word "bankruptcy" is creeping more and more into the public discourse.
"We would like all the stakeholders of Illinois to recognize how close the state is to bankruptcy or insolvency," says Laurence Msall, president of the Civic Federation, a fiscal watchdog in Chicago.
"Bankruptcy is the reality that looms out there," Republican gubernatorial candidate Andrew McKenna Jr. says.
While it appears unlikely or even impossible for a state to hide out from creditors in Bankruptcy Court, Illinois appears to meet classic definitions of insolvency: Its liabilities far exceed its assets, and it's not generating enough cash to pay its bills. Private companies in similar circumstances often shut down or file for bankruptcy protection.
"I would describe bankruptcy as the inability to pay one's bills," says Jim Nowlan, senior fellow at the University of Illinois' Institute of Government and Public Affairs. "We're close to de facto bankruptcy, if not de jure bankruptcy."
Legal experts say the protections of the federal bankruptcy code are available to cities and counties but not states.
While Illinois doesn't have the option of shutting its doors or shedding debts in a bankruptcy reorganization, it seems powerless to avert the practical equivalent. Despite a budget shortfall estimated to be as high as $5.7 billion, state officials haven't shown the political will to either raise taxes or cut spending sufficiently to close the gap.....snip~
Crain's Chicago Business : Subscription Center
Also, Cali use to be the 5th Largest economy in the world.