CHICAGO — A Wisconsin judge has refused the state's request to stay during the appeals process his ruling that overturned portions of a controversial law curtailing collective bargaining rights for most public unions.

Dane County Judge Juan Colas last month overturned portions of the law affecting local governments as part of a lawsuit filed by unions in Milwaukee and Madison. He found they violated free-speech rights and the equal protection clause of the state constitution because safety personnel unions were excluded.

Wisconsin Attorney General J.B. Van Hollen asked Colas to stay enforcement of the ruling during the appeals process. In an order late Monday, Colas rejected the request finding that the state failed to show irreparable damage would occur without the stay in place.

Van Hollen had argued that the budgeting process for municipalities and school districts would be thrown up in the air if forced to abide by the ruling invalidating portions of the law, especially if then higher courts upheld the law. Van Hollen is expected to ask the state appellate court to grant a stay.

Moody's Investors Service recently warned that local governments could feel a negative impact if portions of the law remain invalidated after the appeals process.

Wisconsin Act 10, which was part of Gov. Scott Walker's budget-repair initiative last year, sharply limited collective bargaining rights at the state and local government level, triggering controversy and large-scale protests in Madison, the capital.

The state increased pension and health care premium payments for employees and cut local aid to governments to help eliminate the $3.6 billion deficit in its two-year $66 billion budget, relying on the collective bargaining changes at the local level to offset the cuts in aid.

The changes were projected to save around $1 billion annually in spending by municipalities. The law stripped non-public safety unions of their right to bargain over salary and benefit issues with the exception of base wages that were capped at growth in the consumer price index. Before passage of the law last year, those issues were subject to negotiation.

"Ultimate repeal of these provisions of Act 10 would be a credit negative for Wisconsin local governments because it would slow the process of reducing public employee benefit costs by requiring negotiations with public sector unions to achieve cost savings," Moody's said in a weekly credit outlook report late last month.

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