Completely correct, but a default will mean a much tougher time borrowing in the future. So a bankruptcy now can solve the immediate problem, but this creates a tough situation for the future when debt is needed to finance large projects. What Texas has done was create a "rainy day fund" which is essentially a savings account designed to protect against these sorts of situations. But, that takes fiscal discipline and politicians who are unwilling to attempt to buy votes with money they don't have.