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For those of us who closely watch state and municipal finances, it’s clear that the bankruptcy hound is stalking many — far too many — state and local governments.

In Ernest Hemmingway’s timeless classic "The Sun Also Rises," a man asks his friend, “How did you go bankrupt?” His friend replies, “Gradually and then suddenly.” That’s the way with bankruptcy. Bankruptcy is a catastrophe that you can often see creeping towards you from a mile away, but that still surprises you when it finally takes you down and pins you to the ground. When the massive, snarling, rabid hound of bankruptcy is firmly digging its paws into your chest, it is far too late to maneuver and escape. That’s when you pay for your mistakes with a pound (or two) of flesh.

For those of us who closely watch state and municipal finances, it’s clear that the bankruptcy hound is stalking many — far too many — state and local governments. Sadly, in most cases, both the leaders and residents of those states and municipalities that are on the verge of bankruptcy continue to delay the tough decisions necessary to avoid it. In fact, the larger the financial gaps have become, the less likely elected leaders are either willing or able to adequately address them. So far, states and municipalities have been propped up by ready credit markets, which snap up new bonds while largely ignoring other cascading debts, like chronically delayed infrastructure investments and catastrophically underfunded public pension systems. But eventually — and sooner rather than later — the math will no longer pencil, lenders will transition from lending to collecting, taxes will skyrocket, residents and businesses will flee and the “suddenness” of bankruptcy will be upon us.

I expect that the next great financial calamity we will face will be the collapse of state and municipal credit markets, a la Puerto Rico, but on a national scale. Here are just a few news report anecdotes from the past few days that illustrate how difficult it is to escape the bankruptcy hound when it is already close on your tail.

In South Carolina, legislators are trying to shore up their chronically underfunded and badly mismanaged state-run pension funds by upping required annual contributions by over $230 million. Even though these additional contributions don’t come close to closing South Carolina’s $24 billion pension gap (they should be paying closer to $1 billion annually), legislators are getting hammered by school districts, cities, universities and hospitals that will be required to foot part of the bill.

In Kentucky, the Kentucky Retirement System board chairman revealed that serious math errors made by the plan’s actuaries hid the full extent of pension liabilities from taxpayers. On paper, the Kentucky state pension agency has unfunded pension liabilities of $18.1 billion. Kentucky has not been covering the actuarial required contribution to service that amount, let alone the billions more in liabilities that it just uncovered. Pension liabilities will continue to compound in Kentucky.

In Richmond, California, city officials have had to cut 20 percent of the city’s workforce to try to keep up with ballooning pension costs. The city is on the edge of bankruptcy, and CalPERS' recent (and prudent) decision to lower its projected rate of return on investments from 7.5 percent to 7.0 percent will require even higher pension contributions from Richmond. The higher required contributions could easily tip Richmond into bankruptcy. Nearly a dozen other California cities and towns are also on the edge of bankruptcy for the same reason.

If we are going to avoid what could become a systemic collapse of state and municipal finances, we must take the hard financial medicine today, which means we must fully face our liabilities and pay them. It is the only way to avoid the “sudden” death of bankruptcy.

Dan Liljenquist is a former Republican state senator from Utah and former U.S. Senate candidate. He is nationally recognized for work on entitlement reform.