States in financial crisis should do what North Dakota did in 1919 when it was in financial crisis:
North Dakota has the only state-owned bank in the country. Set up in 1919 to escape Wall Street predators, the Bank of North Dakota has been generating low-interest credit for the state and its residents for nearly a century. North Dakota is one of only two states (along with Montana) currently able to meet their budgets. (Source)
Remember the last time California issued “IOUs” to pay their obligations? The State didn’t have the funds to pay its bills so California issued IOUs to creditors. The State then wanted to allow recipients to use the IOUs to pay for things like their State taxes, State fees, utilities, etc.
If the State had been allowed to do this then in effect the IOUs would have become a form of currency, otherwise known as money. California has not yet pursued it. If California could find a way to print IOUs and successfully encourage their use as currency then California borrow from its citizens and print money –just like the privately owned Federal Reserve is currently doing.
The following links suggest how this could be accomplished: