Wisconsin persists on cuts, protests swell (Reuters)

MADISON, Wisconsin (Reuters) – Wisconsin's Republican governor vowed on Friday to press ahead with legislation to curb the union bargaining rights of public employees as part of a deficit-cutting plan even as protests against the measure swelled.

Speaking at a news conference on the fifth consecutive day of demonstrations against the proposal, Governor Scott Walker said the state is broke and cannot pay its bills unless the plan is approved.

"I told the voters what I would do to get Wisconsin working again," Walker said of his election in 2010. "We are going to do what it takes to get this budget on track."

Republicans have majorities in both the state Senate and the Assembly. In a bid to scuttle the proposal, Senate Democrats fled the state on Thursday and Friday to deprive the Senate of the needed quorum for a vote.

The lawmakers apparently left the state because they were concerned that they would be compelled to return to the Capitol by police if they stayed in Wisconsin.

Republicans have a quorum in the state Assembly and could pass the plan there over the weekend.

Police estimated that 35,000 protesters converged on the Capitol grounds in Madison on Friday, with another 5,000 demonstrators packed inside the building itself, said Carla Vigue, a spokeswoman with the Wisconsin Department of Administration.

On Thursday, a crowd estimated at 30,000 people protested inside and outside the Capitol building.

The protests have so far been peaceful and police said there were no incidents or arrests on Friday.

TEA PARTY

But the potential for confrontation emerged when the conservative Tea Party movement, which supports deep budget cuts, announced that it would hold a rally supporting the Republicans at the Capitol on Saturday.

Drew Ryun, the president of American Majority Action, one of the conservative groups planning Saturday's demonstration, said organizers were "meeting fire with fire."

"We have buses coming in from all over the state," Ryun said. "We see this as the opening salvo of the 2012 election season. The Tea Party movement facing off against the unions. And we like the odds."

Wisconsin is the flashpoint for a national struggle over efforts to roll back pay and union rights of state and local government workers. If the majority Republicans in Wisconsin prevail, other states could be emboldened to take on powerful public employee unions.

The Milwaukee Public School system, which serves 85,000 students in the state's largest city, canceled all classes on Friday after nearly 630 unionized teachers called in sick.

"Every day the crowds are bigger," said Jay Heck, the executive of Common Cause Wisconsin, a non-partisan advocacy group based in Madison, said of the union protests.

President Barack Obama sided with the demonstrators on Thursday, calling the governor's proposal an "assault on unions." U.S. House of Representatives Speaker John Boehner criticized Obama and said he backed fellow Republican Walker.

Walker's administration puts the deficit for the remainder of the current fiscal year at $137 million and for the next two fiscal years under its biannual budget at $3.3 billion.

Republicans want state workers to increase contributions to pensions to 5.8 percent of salary, and double contributions to health insurance premiums to 12.6 percent.

They also want to limit collective bargaining to the issue of wages, and cap increases to the rate of inflation, with a voter referendum needed for bigger increases.

Walker said the alternative is to layoff more than 10,000 workers.

Walker was to unveil his state budget proposal for the next two fiscal years on February 22, but on Friday his office said that speech would be put off until March 1.

U.S. state and local governments are struggling to balance budgets after the recession decimated their finances. Some states such as Wisconsin, Texas, Arizona and Ohio are relying mainly on cuts in spending to balance the books. Others such as Minnesota and Illinois are raising taxes.

(Additional reporting by Vickie Allen in Washington, Darren Hauck in Madison, John Rondy in Milwaukee and Andrew Stern, James Kelleher and Karen Pierog in Chicago; Editing By Greg McCune and Eric Beech)

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Wisconsin governor aims to curb state worker unions (Reuters)

MADISON, Wisconsin (Reuters) – Wisconsin's new Republican governor on Friday proposed sharply curtailing the bargaining rights of public employee unions and other cost-saving measures to rein in the state's budget deficit.

Governor Scott Walker said he will ask the Republican-controlled legislature to pass his "budget repair bill" next week. He said it aims to bring stability to government finances and stave off employee layoffs.

"The last thing we need is any more people on unemployment," Walker said at a news conference.

The proposal drew criticism from Democrats in the state, which has a $137 million budget deficit in the fiscal year ending June 30 and larger deficits to come.

"If Republicans get their way, workers will no longer be able to negotiate over the hours they work, the safety conditions they labor under or the health insurance and retirement benefits they and their families depend on," Senate Democratic Leader Mark Miller said in a statement.

The proposal includes limiting state employee wage increases to the rate of inflation unless approved in a voter referendum. Public employees -- other than police, fire, and inspectors -- would lose many bargaining rights and could opt out of paying union dues after current contracts expire, with dues no longer collected automatically.

State workers will have to increase contributions to their pensions to 5.8 percent of salary, and double contributions to health insurance premiums to 12.6 percent of salary. Wisconsin's unfunded pension liability is $252.6 million, according to Moody's Investors Service.

The plan calls for raising appropriations for prisons and the Medicaid program, which is underfunded by $153 million, while making changes to the health insurance program for the poor. It also calls for selling the state's heating plants.

Walker's plan also would allow the state to push principal payments due March 15 on its general obligation bonds into future years to gain $165 million through a debt refinancing. That money would help cover a court-ordered payment to the Injured Patients and Families Compensation Fund and payments under the state's tax reciprocity program with Minnesota.

SHARE THE PAIN

State employee unions made $100 million in concessions in December to ease the budgetary strain, said Bryan Kennedy, president of the state chapter of the American Federation of Teachers. But Walker's response has been "to eviscerate our most basic rights" and "end labor peace in Wisconsin."

Leading Republican lawmakers say workers have to share the pain of shoring up the state's unsustainable financial problems -- a projected $2.9 billion biennial budget deficit for fiscal 2012 and 2013. This year's budget totals $12.7 billion.

"Anything short of making the tough decisions that are necessary to balance our budget and rein in spending is going to leave our state bankrupt, and the livelihood and well-being of Wisconsin will depend on the swift and decisive action we'll be taking over the next week," state House Majority Leader Scott Suder said.

A growing number of deficit-ridden states have tried to curb expenses by going after public employee union contracts and pensions. Wall Street rating agencies and investors in the $2.8 trillion municipal bond market are increasingly focusing on the cost of employee benefits like pensions as they weigh the credit-worthiness of state and local government debt.

Walker's plan to eliminate all bargaining rights of public sector workers except for a limited discussion of wages is draconian, according to one legal expert.

"Not only is this inconsistent with international human rights law, which recognizes a right to collectively bargain with one's employer, but it also flies in the face of decades of cooperation between the labor movement and the government in Wisconsin," Marquette University law professor Paul Secunda said.

(Additional reporting by Karen Pierog and John Rondy, Writing by Andrew Stern, Editing by Dan Grebler)

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