Illinois

I found a better article. I don't think this is the one I read, but it discusses what happened.
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“Illinois is a real outlier in the most striking way. The sheer size of the state’s unfunded pension liabilities … just looking at the state’s finances, its habit of deferring payments from one year to the next, has created a vicious circle,” said Ted Hampton, vice president with Moody’s Investment Services. “Illinois has had a very large negative balance both in absolute terms and relative to its budget for many years.”

What does the crisis all boil down to? It began with an ego-laden brawl between two powerful men: Rauner and Democratic House Speaker Mike Madigan. Rauner was elected in 2014 as the first Republican governor in Illinois in more than a decade, vowing to “shake up Springfield” in a campaign that demonized Madigan — the longest serving House speaker in state history — and targeted “corrupt union bosses.”

Upon taking office, Rauner, a multimillionaire businessman, laid out a list of policy demands that initially included right to work elements as a condition of signing a budget into law. Rauner wanted changes to laws affecting workers' compensation, collective bargaining and state property taxes, among others. Democrats considered the agenda an attack on unions, which the governor had vilified, saying they had too much power in Illinois politics. Rauner called the measures pro-business and necessary to address decades of financial mismanagement.

But Madigan, who has served as speaker under governors from both political parties, was loath to condition the passage of a budget on the governor’s political agenda. Each side dug in, with unions rushing behind Madigan and Republicans — tired of being shut out for years by Madigan and thrilled to have a generous donor to their campaigns in the governor’s office — lined up behind Rauner. "
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It's a long read with much more info than in my quote.

http://www.politico.com/story/2017/06/10/illinois-debt-deficit-budget-election-239384