States are still in trouble:

Illinois let $5 billion of bills go unpaid. Washington closed state offices. California may cut 200,000 workers’ pay to the minimum wage. Minnesota is delaying tax refunds for a second year.

…

To make ends meet, half the states, including Indiana, Massachusetts and Nevada, have fired workers in the past budget year and 22 put staff on temporary leave, the governors group and budget officers association said.

…

To raise money, Arizona sold its House of Representatives and Senate buildings and California solicited bids for 11 of its office complexes. No sacrifice is too small: Delaware saved $29,000 by eliminating flowers at the state psychiatric hospital and health department.

There’s more in the article. It’s worth noting that California doesn’t actually pass their budget on time in normal years (I think we’re 6 for 31 now), but when our tax revenues shot up during the bubble years, we adjusted our spending as if it were the new normal. We obviously weren’t the only ones.

The state budget of Illinois was $53 billion in FY 2010 (including a $26 billion capital plan, “Illinois Jobs Now!”), so $5 billion of unpaid bills is rather significant. The fact that not paying bills improves a state’s credit rating should give some pause to state vendors. Keywords: pari passu

Selling off long-term state assets to meet short-term funding needs is the stupidest can-kicking exercise available. It’s an expensive loophole in the general fund funding restrictions.