The U.S. Bankruptcy Code trumps state law. It is called federal preemption, a concept most first year law students are familiar with.
Of course, since the judge is a Democrat, she only has to apply the laws that she likes when she feels like it.
It's been many years since I was a 1st year law student, and many things you learn then are later found to be untrue -- to put it mildly.
You need to Look at 11 U.S.C 109 "Who May be A Debtor". Unlike chapter 7, 13, and 11, which are generally open to anyone, a municipality may only file a Chapter 9, and then only if the laws of its state permit it. See 11 U.S.C. 109(c)(2):
[A city may file under Ch 9 if it] " is specifically authorized, in its capacity as a municipality or by name, to be a debtor under such chapter by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor under such chapter....
It gets a little murky after that because I would clearly interpret this issue, that is whether the entity that signed the petition was authorized to do so, as a "core matter" over which the bankruptcy court has sole and exclusive jurisdiction under 28 U.S.C 157(b)(2)(A). Opinions on that point could vary, but that's where the argument will focus, on whether this is a core matter or not. If my opinion is correct, the state court order is a nullity, and the bankruptcy judge will have the task of determining if the filing was authorized under state law.