In Wisconsin standoff, a test: Has governor gone overboard to trim deficit?

A standoff at the Wisconsin state Capitol between the governor and public employee unions is becoming a test case for state executives across the nation who are burdened with having to cut deep into budgets to shore up their states' finances.

Wisconsin Gov. Scott Walker (R) is advancing a bill that will force most state, local, and school employees to pay half their pension costs and pay 12.6 percent of their health-care costs, which is double their current contribution.

Additionally, unions representing workers other than police, firefighters, and troopers will lose their collective bargaining power with the state on anything but wages, and raises will be limited to inflation. Non-law-enforcement unions will also be forced to hold annual elections to remain certified, and workers no longer will enjoy the ability to deduct union dues from state paychecks, steps that are being seen as further weakening union power in the state.

Governor Walker says the cuts will result in a savings of nearly $30 million through the end of June and nearly $300 million over the next two fiscal years. His state is braced with a $137 million budget shortfall for the fiscal year ending June 30 and a projected $3.6 billion gap over the next two years.

Both chambers of the state legislature, which Republicans newly dominated as a result of the November elections, are expected to pass the measures as early as Thursday.

If that takes place, Wisconsin will become the first state to significantly legislate against collective bargaining, says Charles Franklin, a political scientist at the University of Wisconsin in Madison. That "will create major changes in union representation and bargaining rights” throughout the country, he adds.

The proposal to erode state worker benefits to such an extent is setting tensions high in Madison, the state capital. Several thousand people camped out on the lawn of the Capitol Tuesday for a public hearing that lasted 17 hours – running into early Wednesday morning. Forty percent of Madison’s schoolteachers called in sick Wednesday to help lobby the legislature, a move that shut down the city’s school system for a day.

Wisconsin not alone

The scene may become a familiar one to other states that are considering similar measures.

• Ohio Gov. John Kasich (R) is supporting a bill that will potentially eliminate collective bargaining for all state workers. Governor Kasich has said he may propose additional measures such as eliminating automatic pay increases and banning public-employee strikes, both to help cut down the state’s $8 billion budget gap. On Tuesday, hundreds of people jammed into the state capitol to protest the measures.

• A bill moving through the Tennessee state legislature will, if passed, eliminate collective bargaining rights for unionized state teachers and make achieving tenure more difficult.

• In Michigan, a state commerce committee introduced legislation in January that would dismantle the power unions have in negotiating state-worker contracts.

• On Wednesday, Illinois Gov. Pat Quinn (D) signed a bill that limits certain state workers’ rights to join a collective bargaining unit.

Where does the public stand?

Despite the visuals of protesters descending on state capitols where these measure are under debate, there is a sense that the general public is favoring a cut-at-all-cost approach following the midterm elections, which ceded power in many statehouses to Republicans. This is especially true in Wisconsin, where Walker defeated Democrat Tom Barrett to replace two-term Gov. Jim Doyle (D), and businessman Ron Johnson, a Republican from Oshkosh who associated himself with the tea party during the campaign, defeated longtime US Sen. Russ Feingold (D).

Wisconsin voters also transferred power of both houses to Republicans for the first time since 1998.

Professor Franklin says the transition to Republican leadership “shows a strong contingency of the public was very amenable to candidates who were promising very sharp cuts from state as well as federal spending.”

“So while it is certainly possible there will be negative blowback, it is still not at all clear whether someone like Governor Walker has overreached with this plan or whether or not the same majority that elected him as well as both houses of the legislature will be happy and have him elected again,” he adds.

A precursor to how Walker’s proposals might play out are salary freezes enacted by New Jersey Gov. Chris Christie (R) against state teachers and superintendents. Despite a heated battle that drew national media attention, Governor Christie's approval rating rose from 46 percent to 52 percent from December to February, according to a Quinnipiac poll.

Mr. Franklin called the Christie situation “a good political example that touching state worker benefits and pay is not necessarily a third rail in politics these days.”

Few options left

Ending collective bargaining agreements is a next step after many states exhausted budget-cutting tactics such as furloughs, hiring freezes, and cutbacks in pension and benefit obligations. The current move in the direction of union cuts is due to the new generation of first-time Republican governors who may feel they have more political capital, says Leslie Scott, director of the National Association of State Personnel Executives in Lexington, Ky.

“A lot of these governors feel there was somewhat of a mandate for change,” Ms. Scott says.

Hardships posed by the recession are responsible for fanning public anger in the direction of the state workers, says Robert Novy-Marx, an expert on state pension reform at the Simon Graduate School of Business at the University of Rochester in New York.

“[Public workers] are being perceived as suffering none of the pain and retiring with higher benefits,” Mr. Novy-Marx says.

That perception is unfair considering the roles state workers play in providing “vital services to families and communities,” says Alice Johnson, a labor attorney with the Illinois Nurses Association in Chicago, which represents more than 3,600 nursing professionals. Ms. Johnson interprets the Wisconsin legislation as “not just an attack on unions, but an attack on the middle class” and adds that targeting workers such as teachers does not bode well for local communities.

“The worst part about it is everybody suffers,” she says.