California is broke.
Of course a company failure can drag a community down. It always has. But propping it up with government largesse or other artificial money-eating methods just puts off the pain, and makes local failures into widespread ones.
Do you honestly think that if Roger Smith had pretended the Flint plants were profitable and kept them going for another few years at a net loss, that the end result would have been any better?
California is where it is, and the U.S. is getting to the same point, by pretending that the laws of economics don't mean anything. It's like those well-meaning amateur animal lovers who think they should be saving all the pretty deer from the mountain lions.