There is a big body of literature demonstrating how the value of money is derived from the state's ability to levy and enforce taxes[1]. In fact, this is the basis of most sovereign currency regimes with floating fx. In these regimes, governments issue currency out of thin air and levy taxes to force its ubiquity. However, at the U.S state level(CA,FL,TX,etc) and in the case of the Euro(France,PIGS,etc)at the national level, these entities are constrained by tax revenue and ability to borrow same as a household or business. Thus, instead of bitcoin, which is backed by nothing, why not have states issue their IOU's to pay state liabilities but also accept those IOU's to retire liabilities to the state. Naturally, this idea is in lieu of federal aid which has been withheld to states because of austerity politics.
[1] http://neweconomicperspectives.org/2011/06/modern-money-theo...