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Wisconsin's Tough Choice

February 11, 2012

Facing a $3.6 billion deficit for the state's 2011-13 budget, Wisconsin Gov. Scott Walker says he knew he had to do something and didn't really like the choices.

As the former Milwaukee County executive and a state Assembly representative before that, the first-time governor, who is Republican, knows about Wisconsin's finances and believes there are only so many ways to fix an out-of-control budget: raising taxes, laying off public employees, cutting core services or structurally changing benefits for public employees. He chose the last option—a move that drew national attention.

"When I ask people which of those other options would have been their alternative, most people don't have one," Walker says in an interview with Workforce Management.

The budget shortfall was the largest the state had ever seen, and Walker says he didn't want to raise taxes, fire anybody or cut services. He wanted most public employees to start contributing a portion of their paycheck to benefits and do away with many collective bargaining rights for unions. This second part of his plan would allow school districts and municipalities to deal with the reduced amount of funds they would be receiving from the state by not being restricted by certain union collective bargaining agreements. It would also give public employees the power to decide whether they wanted to be part of a union.

"State workers have had a sweet deal in Wisconsin for a long time, a deal you can't find in the private sector," says Brett Healy, president of the conservative think tank MacIver Institute in Madison, Wisconsin. "To have government workers contributing will directly result in savings that go toward fixing the $3.6 billion deficit."

It's been a political brawl between public employee unions and Walker supporters since the bill was introduced in February 2011. The bill stripped all public employees, except police officers and firefighters, of most of their collective bargaining rights. It also required all public employees—except those two groups—to pay 5.8 percent of pretax salary toward their pension.

The issue brought massive demonstrations to the state capital. While Walker says the state had no money to offer salary increases to public union workers, protesters rejected the claim and branded him a union basher. Now that the law is in effect, opponents have launched a recall effort against Walker.

Union leaders said their members would make the new contributions if collective bargaining rights were preserved, but Walker says those rights were restricting local municipalities from realizing any savings. Under many collective bargaining agreements, local employers such as school boards and communities made most of the pension and health care payments for their workers.

About 60 percent of the state's budget goes to local governments and school boards, Walker says. Facing the state's largest deficit in history, Walker says municipal budgets would have been crushed under the weight of the state's financial shortfall. "I looked at that, and said that if there's a cut, there's no way to balance it without hurting services or local governments," Walker says.

As a result of the reforms, overall school tax levies are down for the first time since 2006 by 1 percent to $4.65 billion in 2011 from $4.69 billion in 2010, the nonpartisan Wisconsin Taxpayers Alliance reported in December.

Patty Kujawa is a writer based in Milwaukee. To comment email editors@workforce.com.

Workforce Management, February 2012, p. 11 -- Subscribe Now!