(a) The "collapse" you refer to presumes that neither state will be able to tax their way out of its problems, when in fact either could do so without coming close to the tax burdens of European countries that provide similar benefits --- the implied idea here is that the states are so competitive that people would simply move to Nevada or Indiana to escape those taxes. Will they? People who live in Evanston are unlikely to enjoy Munster.
(b) In both states, the "benefit" that's been financed on the backs of future generations is generous, poorly-regulated defined-benefit pension plans for state employees. I agree that's a huge problem, but it's not the same kind of problem as financing for Medicaid, or, really, for social services of any sort.
Tennessee also has the lowest state debt per capita of any state, $6,400 versus $20,500 for California. It's got only $415 in unfunded pension liabilities per person, versus $3,250 in California. It's among the top-10 states for lowest tax burden, lower unemployment than average, and higher than average growth in GDP per capita.
Tennessee has made a conscious decision not to pay for public services now by pushing the burden onto future generations. After the governments of places like California and Illinois collapse under the weight of their debts, places like Tennessee will at least be able to plod along offering limited government services in a sustainable way.