Wisconsin governor wants to sharply curb unions

MADISON, Wis (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 growing budget deficit.

Governor Scott Walker said he will ask the Republican-controlled legislature to pass his "budget repair bill" next week. He said it was aimed at bringing stability to state finances and stave off employee layoffs this year.

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

The proposal drew outrage from labor unions and 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.

A growing number of deficit-ridden states have initiated efforts to curb expenses by going after public employee union contracts and underfunded pensions.

Elements of Walker's proposal include state employee wage increases limited to the rate of inflation unless approved in a voter referendum. State workers -- 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 raise the amount they contribute to their pensions to 5.8 percent of salary, and double their contribution 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 for 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.

SHARE THE PAIN

Leading Republican lawmakers said workers had to share in the pain of shoring up the state's unsustainable financial problems -- a projected $2.9 billion biennial budget deficit for 2012 and 2013. The current year's budget is $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.

"We are out of money and the options are few. We can either raise taxes -- which is absolutely off the table -- reduce spending or lay off workers," Jeff Fitzgerald, the Republican Speaker of the State Assembly, told local radio.

"I expect the Capitol to explode" with protests, Fitzgerald said. "It's going to be a very difficult week."

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

The plan to eliminate all bargaining rights of public sector workers except for a limited discussion of wages was 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. He said it may prove to be a bargaining chip in the state's drive to cut costs for pensions and health care.

"Even if that were the case, one must ask why Governor Walker did not first sit down and discuss these issues with the public sector unions, but instead, within a month of taking office, went directly to the most divisive approach imaginable," he said.

(Additional reporting by Karen Pierog in Chicago, John Rondy in Milwaukee; Writing by Andrew Stern; Editing by Greg McCune)