Walker Warns of Deeper Debt if Wisconsin Lawmakers Don't Get Budget Deal

The legislative standoff and union protests in Wisconsin's capital have mostly focused on the Gov. Scott Walker's push to roll back collective bargaining rights for public workers as part of a budget-balancing plan, but doing nothing would mean even greater problems for the state.

Wisconsin has until Friday to pass legislation to bring its budget into balance or it will face $165 million in additional expenses associated with missing a deadline to restructure its debt.

Walker has proposed balancing the current budget -- closing a $137 million gap -- partly by saving $30 million through increased health care and pension contributions from the state's public sector employees. State Republicans warn that failing to do that could force the state to lay off 1,500 workers.

"We are going to be having to lay off jobs soon if we can't restructure our debt by Friday," state Republican Sen. Alberta Darling, chairwoman of the Joint Finance Committee, told Fox News on Monday.

Some of the sniping over the current budget impasse stems from a report issued last June by the Wisconsin's Fiscal Bureau, which stated that the state would be $121 million in surplus by June 30, 2011, the end of budget calendar. However, the report also noted millions in unpaid bills and expected shortfalls: The state owes $153 million to provide Medicaid services for the needy. It owes an additional $58.7 million to Minnesota under a discontinued tax reciprocity deal. And millions more are due to other offices facing shortfalls, including $21.7 million to the state Department of Corrections.

An additional $200 million is also owed to the state's patient compensation fund, a debt courts have declared was a result of an illegal raid on the fund under Democratic former Gov. Jim Doyle.

Those impending debts all contribute to an expected shortfall heading into the new fiscal calendar, which begins July 1 and is in effect for two years. Walker, a Republican, delayed a Tuesday release of his budget blueprint, which is expected to cite a $3.6 billion deficit.

Some tried to blame Walker's corporate tax cut bills approved in January for the $137 million deficit. But those cuts do not go into effect until the next two-year budget.

Walker said the real culprit is $1 billion worth of tax increases during the Doyle administration and a one-time jolt of $2.2 billion from federal stimulus money that deferred the budget deficit to this year.

Union officials say Walker is asking too much from public sector employees, who already agreed to contribute 12.6 percent to their health care benefits and 5.8 percent to their pensions, up from 4 to 6 percent and 0.2 percent, respectively. That could cut take-home pay for many workers by about 8 percent, say union leaders.

But the real beef is with Walker's call to limit collective bargaining rights for state workers.

Removing that right would limit pay increases to less than the Consumer Price Index unless approved in a local referendum. Workers could not negotiate their benefits and working conditions. Unions could not force their workers to pay dues, and would face a vote every year to remain certified. The Joint Finance Committee allowed teachers at the local level to get the same grievance protections provided to state employees.

Walker's office issued a statement Monday giving its examples of how collective bargaining wastes taxpayer money. It noted that if state teachers weren't forced to get their health insurance through the teachers' union company, Wisconsin Education Association Trust, that could save the state $68 million per year.

"Currently, many school districts participate in WEA Trust because WEAC collectively bargains to get as many school districts across the state to participate in this union-run health insurance plan as possible. Union leadership benefits from members participating in this plan," the governor's office said. "If school districts had the flexibility to look for health insurance coverage outside of WEA Trust or the state plan, additional savings would likely be realized."

Another example was a collective bargaining deal that allows state Department of Corrections workers who call in sick to collect overtime if they work a shift on the exact same day. The cost of the deal is $4.8 million, the governor's office claimed.

In an attempt at breaking the impasse by the week's end, one Senate Republican, Dale Schultz, has proposed sunseting temporarily rollbacks in collective bargaining rights to get through the state's next two-year budget. But that has not won over other members of the Republican caucus, who Senate Majority Leader Scott Fitzgerald described as "rock solid" in their support for Walker.

"There's no cracking amongst ranks," Darling said. "There might be one person who has another idea. But we are holding together. We're going to pass this bill."