Sometimes we can be a gloomy bunch here on ER.org. With respect, I offer a few statistics that contradict the opinion that there is an increasing frequency or severity of state and local government fiscal disasters.
There are 50 states, 3033 counties and 18443 municipalities in the U.S.
Of those 21,500 +/-, only 13 filed for Chapter 9 bankrupcy in 2011. (0.06%) The number so far is 2012 is also about one per month.
County (United States) - Wikipedia, the free encyclopedia
Google Answers: Number of Cities, Towns and Villages in the United States
Chapter 9, Title 11, United States Code - Wikipedia, the free encyclopedia
Between 1990 and 2010, the number of Chapter 9 municipal bankrupcies ranged from 3 to 18 per year. On average, the early 1990's had more municipal bankrupcy filings that more than in recent years.
http://www.abiworld.org/statcharts/Chapter9Filings1980-Current.pdf
Depending on how it is counted, between $2 billion and $25 billion of $3.7 trillion of municipal debt (between 0.01 and 0.1%) defaulted in 2011. Many of these were specialty issues, like housing bonds.
Whitney
My point is not to minimize the very real distress of those state and municipal governments that do make the news from coast to coast. "Many" are indeed in a mess. Perhaps even the majority of local governments in the U.S. have some component of their balance sheet that could be characterized as "kicking the can down the road".
In any statistical population, however, the whole is only partially defined by the extremes. Plenty of state and local governments are making decisions to balance budgets, reduce spending or even to (gasp!) raise taxes to balance budgets, pay pensions and cover their debt service.
By comparison, 88 of 5091 publicly traded corporations filed for bankrupcy in 2011 (1.7%)
Continuing Decline In Number Of US Publicly Traded Companies - Misunderstood Finance
Corporate bankruptcies fall in 2011 - Los Angeles Times