WASHINGTON — Claims that states and localities are facing massive budget gaps, unfunded pension liabilities, and health care costs that will lead to bond defaults and bankruptcy filings are greatly exaggerated, and mask the need for states to overhaul out-of-date tax systems and make other structural changes, a new report warns.

The report, to be released Thursday by the Center on Budget and Policy Priorities, also cautions federal lawmakers against considering legislation that would allow states to file for bankruptcy, warning “the necessity for it has not been proven” and that it “could do considerable damage” by pushing up borrowing costs and undermining states’ efforts to invest in infrastructure.

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