Wisconsin's Walker Set to Sign Controversial Bill

CHICAGO — Wisconsin Gov. Scott Walker was expected to quickly sign a controversial bill that sharply curtails the collective bargaining rights of most public employee unions and requires government employees to pay more towards their health care premiums and pensions.

The state Assembly approved the amended budget-repair bill Thursday in a 53-42 vote that was delayed as capitol police removed demonstrators who had blocked the chamber’s entrance. All Democrats voted against the plan along with four Republicans. The Senate’s approval of the measure in an 18-to-1 vote late Wednesday sparked renewed protests and prompted charges from the bill’s foes that lawmakers were acting illegally because of the short notice provided to the public.

The freshman governor is a Republican and the Legislature is controlled by Republicans who paved the way for the vote by stripping out of the bill Walker’s proposed $165 million debt-restructuring proposal. The removal of the direct fiscal elements of the bill lowered the number needed to establish a quorum in the Senate, according to Republicans.

Walker proposed the budget-repair bill to deal with at least $137 million in red ink in the current fiscal 2011 budget that runs through June 30 and to help lower a $3.6 billion deficit in the next two-year budget unveiled last week. The additional pension and health-care premium payments are expected to save $30 million this year and $300 million in the next cycle. He contends the collective bargaining changes will save the state money and save local governments and school districts $1.5 billion over the next two-year budget cycle.

While the Assembly had previously approved the original plan, the 14 Democratic senators succeeded in stalling passage of the bill by fleeing the state in mid-February due to their opposition to the curbs on collective bargaining rights. With the debt restructuring included, the bill required at least one Democrat to establish a quorum. Walker still plans to push for approval of the debt restructuring that was removed from the bill, but it requires the return of Democrats.

“The Senate Democrats have had three weeks to debate this bill and were offered repeated opportunities to come home, which they refused,” Walker said in a statement. “In order to move the state forward, I applaud the Legislature’s action today to stand up to the status quo and take a step in the right direction to balance the budget and reform government.”

Democratic Senate Minority Leader Mark Miller had a different take.

“In thirty minutes, 18 state senators undid 50 years of civil rights in Wisconsin. Their disrespect for the people of Wisconsin and their rights is an outrage that will never be forgotten,” he said after the Wednesday night vote.

Though some efforts were underway to reach a compromise that would persuade Democrats to return, Walker had warned that all pieces of the bill were needed to deal with the state’s deficit and that 1,500 employees would be laid off if no action were taken.

Those warnings had come as the state faced a March 15 closing deadline for issuance of refunding bonds for the debt restructuring. But on Wednesday, officials said they had found what they believed was a way around that deadline that would buy another month to get legislative approval to complete the restructuring.

To provide budgetary relief, the state wants to current refund more than $220 million of general obligation bonds due May 1. It had existing authority to refund about $61 million, but approval was needed for the remainder. Under current rules, that payment must be funded by March 15 because Wisconsin has outstanding operating notes so a rough deadline of early March was set to price the refunding bonds.

That deadline has passed, but officials believe by accelerating a deposit needed to repay the notes, the deadline to fund the May 1 GO payment can be extended to April 15. The state’s bond counsel on the refunding issue, Foley & Lardner LLP, reviewed the move and has signed off on its legality.

The state’s Legislative Fiscal Bureau said in a memorandum Wednesday that “if this administrative action would be taken … it is possible that the earlier time line could be extended by 30 days. Under this extended timeline, legislative enactment would need to occur in early April, in order to allow time for the debt restructuring transaction to be completed.”

Wisconsin capital finance director Frank Hoadley had words of caution. “It gives us the additional time in which to execute the transaction, but we could find ourselves in the same position in 30 days,” he said.

The swift vote on the amended budget-repair bill prompted more than angry protests. Lawyers for the Wisconsin State Employees Union filed a motion in Dane County Circuit Court asking the court to declare Department of Administration Secretary Michael Huebsch in contempt for restricting access ahead of the Wednesday vote. Democrats charged that Republicans violated state open-meetings rules by acting during a hastily called meeting.

In other state budget news this week, Moody’s Investors Service called Walker’s proposed $59 billion two-year budget a credit positive in its weekly credit commentary.

“If enacted, the budget will be credit positive for Wisconsin by bringing the state’s finances closer to a structural budgetary balance. … Passing the budget will be no easy feat,” the report said, given the Democrats’ position on the budget-repair bill. 

The budget relies mostly on cuts to eliminate the deficit and bringing recurring revenues more in line with ongoing expenses. The plan cuts school aid by $749 million, Medicaid by $500 million, higher education by $250 million, and local government aid by $96 million.

Fitch Ratings, Standard & Poor’s, and Moody’s all rate the state’s $7.2 billion of GOs in the mid-double-A category.

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