Very interesting indeed. I've been trying to listen to morning radio as Mrs. Blues permits and am not up to speed on this.
This is the political equivalent of a Nuclear Strike. For one, it will strike fear into the hearts of those whose overwhelming need is lifelong security. Face it, that is why folks work for the state. I was shocked when I visited my dad in a state office - of maybe 20-30 folks in the office, only a half dozen were doing state work. The rest were working on retirement plans or talking about retirement. Those guys getting a layoff notice would be, well, asking to go nuclear.
Second, it would help fuel the exodus out of state. Alaska actually lost population last year due to some combination of factors in spite of all the attractors (TV shows in tough times, no/low taxes, PFD). There are major tax/spending proposals on the table, and they will have real consequences.