They don't pay taxes there?

They do pay taxes here, it's not even an issue. Though on principle, I do see how state workers not paying taxes may be a bit of a funky idea. If state workers don't pay taxes, it really just reinforces the perception that state workers are an elite, protected class of people.

Similarly, a lot of the people who want to make the state workforce more "normal" are also interested in letting state employees compete in a more normal labor market so that they can receive better pay for better work. Instead of wallowing around in slightly lower salary jobs-for-life that happen to also come with pensions-for-life.