True.I have no idea what Ohio will do, but I think you are missing something in your assumptions. In the medium term, you can't pay people less and get the same quality. Paying teachers and police the same (I say the same and not more since this bill just keeps the pre-Kasich status quo) will lead to better teaching and policing than if you cut their pay. Better schools and lower crime are important factors in attracting new residents and businesses. In an extreme example, the population in Detroit has fallen precipitously even as the cost of living has dropped sharply.
And I don't think it's fair to the voters to suggest that they don't understand your argument. I'm sure that as Kasich and his allies campaigned publicly for their law they made it perfectly clear that unionization didn't lead to free money. That a strong majority of the voters of Ohio chose a different path than the one you favor indicates a difference in values more than a difference in knowledge level.
Their values are easily explained.
Most people are all for screwing others but not so hot on screwing themselves.