* Republicans still need to end Senate standoff on bill
* Wisconsin a national flashpoint in union showdown
* Vote held abruptly after midnight, surprising Democrats (Adds details, paragraphs 8-9)
By James Kelleher
MADISON, Wisc., Feb 25 (Reuters) - The Wisconsin state Assembly early on Friday approved a Republican proposal to strip public sector unions of most collective bargaining rights despite fierce objections from Democrats and labor unions.
The vote sets the stage for a showdown with state Senate Democrats who last week left Wisconsin to prevent a vote in that chamber, which also must approve the measure if it is to go into effect.
After two all-night sessions and a Democratic bid for a compromise, the Republican-dominated Assembly abruptly ended debate early on Friday and approved the bill by a vote of 51 to 17.
Republican Governor Scott Walker, who has said the measure is critical to restoring Wisconsin’s financial health, hailed the approval in the lower house of the state legislature.
Walker has set a deadline of Friday for approval of the measure to give the state time to refinance bonds and make a payment on state debt that is due by March 15. He says the bill is necessary to close a budget deficit of $137 million for this fiscal year and $3.6 billion in the next two years.
The outcome of the vote was greeted by chants of “it’s not over yet” and “we are here to stay” from protesters who have vowed to fight a proposal they say encourages similar measures in other states and could cripple the U.S. labor movement.
For more U.S. budget, deficit fights [ID:nN11152338]
FACTBOX on Wisconsin proposal [ID:nN21220065]
The plan has generated widespread protests among Wisconsin teachers and other union members. More than 50,000 demonstrators poured into the state capital of Madison over the weekend to protest against the plan. Hundreds continued to protest inside the Capitol on Thursday.
Republicans in the Assembly called the vote at about 1 a.m. local time, surprising many Democrats, some whom were not in the chamber and were unable to participate. Republicans took a private elevator to an exit sealed off from the protesters and did not address the news media after the vote.
Cory Mason, a Democratic member of the Assembly, said, “It occurred to me that I have never been more happy that there are two houses in the legislative branch.”
“This is not democracy!” chanted protesters massed just down the hall from the Assembly chamber before the final vote.
In the state Senate, Republicans hold a 19-14 majority but need a quorum of 20 lawmakers to vote on spending bills. All the Democrats left the state for Illinois last Thursday because they feared they could be compelled to attend the Senate if they remained.
Wisconsin Republicans sent police on Thursday on an unsuccessful search for the runaways. State patrol officers were dispatched to the Democrats’ homes on suspicion that some have been sleeping in their own beds at night.
Republican Senate Majority Leader Scott Fitzgerald said he had hoped the Democrats could be convinced to return, although he acknowledged the officers cannot arrest them.
Democratic lawmakers and unionized public employees said the Walker plan is an attempt to bust the unions and choke off funding to organized labor, the largest source of funding to the Democratic Party.
The measure would make state workers contribute more to health insurance and pensions, end government collection of union dues, let workers opt out of unions and require unions to hold recertification votes every year.
Collective bargaining would be allowed only on wage increases up to the rate of inflation under the plan.
If Republicans prevail in Wisconsin, other states could be inspired to take on powerful public unions. Wisconsin-inspired curbs on union rights have been debated in the legislatures of other states including Indiana, Ohio, Tennessee and Kansas.
U.S. state and local governments are struggling to balance budgets after the recession decimated their finances. Other states like Texas, Arizona and Ohio are relying mainly on cuts in spending, while Minnesota and Illinois are raising taxes.
Reporting by James Kelleher and Jeff Mayers; Editing by John Whitesides, David Bailey and Will Dunham