From The Daily Kos discussing the same and other information:

"Some reasons for municipal collapse: First, losses on investments will require much higher pension contributions. Estimates vary but some states and towns will need to increase their contribution by 50% or even 100% starting in 2010 or 2011."  Even those who didn't just decide that teachers can retire at age 55 instead of 62, in a country where most workers only get Social Security and those born after 1960 won't even get that until age 67 -- even if there aren't further cuts, which there will be.

"Second, spending has exploded. In New York City, the average compensation for full-time worker rose from $65,401 in 2000 to $106,743 - a 63% increase." Most of that, by the way, goes to retirees not workers.

"Third, accounting gimmicks are near an end. To meet booming expenses, many municipalities have engaged in questionable practices, such as selling property to meet current expenses." They are still calling for "innovative measures" in New York State.

"Fourth, disclosure to municipal bondholders has been poor. Financial disclosure for municipal financing is not well enforced." It's been good enough for me not to buy any.

Also from the Kos: "Most people assume that muni bonds are safe from default. That's not true. Between 1970 and 2000 there were only 18 defaults on rated muni bonds. For instance, Cleveland in 1978 and New York a few years earlier. However, there were over 1,300 defaults on un-rated muni bonds during the same period...In 1935 there were at least 3,252 municipal issues in default. It's worth noting that the bottom of the Great Depression was in 1933."

So there was a two year lag back then as now, it would seem.  I've also read that Mississippi passed on constitutional amendment back then, disawoving its debts but promising never to do it again.  And what of judges?

"In 1933, the Iowa Supreme Court ruled the City of Dubuque was required to meet its bond commitments. Kevin A. Kordana, a University of Virginia Law School professor, has written: "[T]axpayers promptly replaced the Iowa Supreme Court justices with ‘judges already committed to their anti-bond- holder viewpoint.’  A tangle in the federal courts followed which would require more explanation than it is worth, but a headline from the New York Times probably says all one needs to know about human tendencies in time of woe: 'Iowa Farmers Abduct Judge From Court; Beat Him and Put Rope Around His Neck.'"

Can we do that to the New York State Legislature instead?