As if those are the only two options... what happens when the unions plans their strikes for the week before a major event, like transit workers before the DNC here in Philly?

Also, when tax-free pension contributions go up and taxable payments to future retirees go down... then taxes collected also goes down...

They strike they strike. It's happened before, it will happen again.

As for a change in tax revenue, the same is true if you contribute more to your 401k and/or get back less because your investments didn't do good. Also, if you lay state employees off, your state income tax revenues go down.