The states can find other things to cut than middle class benefits.
Like what? E.g. in Chicago, the infrastructure is crumbling so that teachers can get paid far more than they would earn in the private sector given their qualifications, meanwhile getting 13 weeks off each year.
It's entirely possible for a state to have reasonable policy w.r.t. current and future expenses given a certain tax base, then lose that tax base and get stuck with unsupportable obligations. If NYC became Detroit over a period of 10 years, just pension liabilities would destroy it going forward.
In case you didn't realize it, tax rates closer on par with other developed countries are a perfect solution to that problem.