John Sides has posted dueling graphs on unions and state budgets. Reihan urges caution when interpreting such charts. Seth Masket finds the above graph the "most telling." Masket recognizes the limits of this correlation but asks us to suppose "for a moment that this relationship is causal, and that greater unionization leads to greater public debt load":
The main benefits that union membership conveys are higher pay and improved working conditions, both of which cost the employer (in this case, the public) more. So if a greater percentage of your state's work force is unionized, you're probably going to be paying more for the labor. And since labor costs are usually contractual and not easily cut in the short run, states with greater labor costs will go into debt more quickly when revenues take a dive. This shouldn't be particularly controversial or surprising.
What the evidence above doesn't show is what citizens get by paying more for public labor.
With higher pay, you can usually attract better trained workers, turnover will be lower, services will be of higher quality, etc. (By the way, the two states with the lowest public sector unionization rates -- Louisiana and Mississippi -- have the highest corruption rates.)
Sometimes good things -- even when they come from the government -- cost more.
Mike Konczal yawns and instead focuses on the relationship between state budget shortfalls and state housing bubbles.