Wisconsin’s Walker Seeks to Shift Jobs From Payroll

(Corrects first paragraph to show most jobs being shifted to a new entity, adds details of change in fifth.)

Wisconsin Governor Scott Walker proposed eliminating almost 22,000 jobs from state payrolls by shifting the bulk to a new authority. His proposed 2012-2013 budget also requires workers to contribute more to their health and retirement plans to help close a $3.6 billion deficit.

The first-term Republican, whose plan to curb collective bargaining for public workers spurred protests across the U.S., would cut money for most state departments by 10 percent and lower public-education funds by more than $700 million. The $60 billion spending plan reduces outlays by $1.7 billion annually for the two years beginning July 1.

The former Milwaukee County executive was elected in November as fellow Republicans took control of the state Legislature. He and governors in 43 other states are looking for savings to close budget deficits totaling as much as $125 billion next fiscal year, according to the Washington-based Center on Budget and Policy Priorities.

“Governments around the nation and world are facing the hard reality that spending has outstripped our ability to pay,” Walker, 43, said in documents for the fiscal 2011-2013 budget he submitted to the Legislature today in Madison, the capital.

The budget trims 17,418 positions from payrolls by creating a separate entity for the University of Wisconsin-Madison. The state’s staffing will be reduced by a total of 21,325 by shifting positions to other authorities associated with health and housing, closing the commerce department, shutting juvenile- correction facilities and eliminating vacant posts, according to the budget

The governor’s budget requires government employees except police and firefighters to pay 5.8 percent of their salaries for pension costs, up from nothing now, and to cover about 12 percent of their health-care premiums, up from 6 percent.

Education Funds

It reduces funds for public primary and secondary education by $749.9 million over its two years. Local school districts would be required to lower per-pupil spending by 5.5 percent from the current budget. State money for the University of Wisconsin would be pared by $250 million.

County and municipal aid payments would be cut by $1.2 billion over the budget’s two years. Future contributions to local governments would be linked to savings in compensation costs.

The spending cuts would help offset a $1.26 billion reduction in federal aid that the state used in the previous two-year budget to pay for Medicaid, the health-care program for low-income residents.

Walker’s budget doesn’t raise taxes or fees. It caps municipal property levies according to a formula and requires localities to pass savings in debt service to residents through tax reductions.

Business Breaks

Businesses would receive tax breaks on the gain in value of capital assets in the state. A tax credit for new jobs would be expanded to include higher-salaried workers.

“This is a reform budget; it is about getting Wisconsin working again,” Walker told a joint session of the Legislature. “We need a balanced budget that works and an environment where the private sector can create 250,000 jobs over the next four years.”

Walker’s presentation came as demonstrations at the Capitol to protest his so-called budget repair bill entered their third week.

The bill aims to close a projected $137 million deficit for the current fiscal year and a $3.6 billion gap in the next biennium. Walker has said the repair bill would generate $30 million in savings this fiscal year and $300 million in the next two years by having workers contribute more to their health and retirement benefits.

Voter Approval

It also calls for voter approval of wage increases that exceed inflation, requires union recertification votes every year and ends automatic dues withdrawals from paychecks, according to the governor’s office. The measure made Madison a focal point for protests against Republican-led efforts in states including Ohio and Indiana to cut benefits and the bargaining power of government unions.

The repair bill passed Wisconsin’s Assembly on Feb. 25 after more than 60 hours of debate. The bill remains stalled in the Senate because Democrats there are boycotting a vote, denying the chamber a quorum.

The governor yesterday called on Senate Democrats to end their walkout, saying a failure to return today would jeopardize a $165 million debt refinancing designed to lower costs. The savings are incorporated into the budget Walker released today, said his spokesman, Cullen Werwie.

Forty-two percent of those polled in a Pew Research Center survey released yesterday favor backing the public employee unions, while 31 percent side more with Walker. The national telephone poll of 1,009 adults was conducted Feb. 24-27 and has a margin of error of plus or minus 4 percentage points.

To contact the reporter on this story: Esmé E. Deprez in Madison, Wisconsin, at edeprez@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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