"Except in this instance, the State is technically bankrupt, at least until the legislature finds a way to tap the principal of the PF to pay our bills."

my2cents,

This argument might be valid if there were other contracts or leases or bond issues that were defaulted under the "subject to appropriation" clause.  As a casual observer it appears to me that the decision was based on dissatisfaction with the lease deal, not a lack of funding.