What happens to a state locked in a perpetual pension induced budget spiral -- because of the pension obligations, states may have to raise taxes while cutting regular government services to balance their budgets. This will create states that offer the worst of both worlds: high taxes with terrible government services. As people leave those states, the revenue generating base of the state goes down -- creating more pressure on the budget. What business or person stays in a state like that?
It sounds like a fiscal death spiral.
Maybe the subtitle on the "Welcome to California" signs at the border should state:"Where our taxes are really high, but at least the government services are bad!"
Mismanaged states will suffer in the short term but come out in a sustainable state on the other end. It will be difficult - as are unwinding other bad decisions - but that doesn't make it impossible.
What's step two, Skullberg?