Maybe not missing the point, but surely not seeing the big picture. Even if it costs you 25k, which seems stupidly high to “train” an executive level person who should already have executive experience, year one you’ve “lost” 5k. By year two you’re already ahead.
Sure, the guy you hired may want a raise, but he’ll know that his predecessor tried the “give me more money or I quit” route and was told, “don’t let the door hit you in the ass on the way out”, so more than likely he’ll be more reasonable. Besides, you’re assuming that Mr 50k will really quit if he doesn’t get his raise. Chances are he won’t, because when he starts shopping other jobs he’ll quickly realize he’ll need to make 40k more to make up for the benefits he’s getting at the state job. And, if you give him a 10k raise this year, you know damn well that next year he’s going to try the same exact thing.