MADISON, Wisconsin | Wed Feb 23, 2011 12:00am EST - The Wisconsin state Assembly late on Tuesday rejected an attempt to send back to the drawing board a Republican proposal to curb public sector union rights that has sparked large protests and a tense stand-off with Democrats.

Republican Wisconsin Governor Scott Walker warned that thousands of state and local government workers would be laid off if lawmakers do not approve his party's plan to reduce budget deficits.

"We are broke in this state because time and time again politicians of both political parties ran from the tough decisions and punted them down the road for another day," Walker said in an address to state residents.

In a first test vote, the Republican-controlled state Assembly voted against sending the proposal back to a committee for more work. The vote was 56 to 39, with only one Republican joining minority Democrats, according to website WisPolitics.

Hundreds of protesters choked the state Capitol's halls on Tuesday chanting, "It's about rights, it's not about money."

The proposal would strip most collective bargaining rights from many state workers. Walker said it is necessary to close a budget deficit of $137 million for this fiscal year.

Wisconsin Senate Democrats, who left the state last Thursday to deny a quorum for voting on the budget proposal in the state Senate, stayed outside the state again on Tuesday.

Wisconsin has become the flashpoint for a U.S. struggle over efforts to roll back pay, benefits and bargaining rights of government workers. If the majority Republicans prevail, several other states could be buoyed in efforts to take on the powerful public unions.

Nationwide budget woes

U.S. state and local governments are struggling to balance budgets after the recession decimated their finances. Other states like Texas, Arizona and Ohio are relying mainly on cuts in spending, while Minnesota and Illinois are raising taxes.

The changes sought by Walker in Wisconsin would make state workers contribute more to health insurance and pensions, end government collection of union dues, let workers opt out of unions and require unions to hold recertification votes every year.

Collective bargaining would be allowed only on wage increases up to the rate of inflation.

Walker wants the bill passed by Friday as part of a plan to push principal payments on general obligation bonds into future years to save $165 million. Under that plan, the bill must be passed by Friday to allow time to sell the debt.

While Wisconsin has been the center of attention, several other states are considering legislation to limit union rights.

The Indiana state Senate on Tuesday approved a measure to limit the collective bargaining rights of teacher's unions. Indiana House Democrats, like their Senate counterparts in Wisconsin, stayed away from the Capitol, stalling a vote on separate "right to work" legislation.

Thousands of people picketed the state Capitol in Ohio on Tuesday to protest a bill to cut collective bargaining rights for state workers. Ohio's bill goes even farther than Wisconsin's in prohibiting collective bargaining for some state workers.

Hundreds of people also demonstrated on Tuesday to oppose proposed limits to union powers by new Republican governors in New Mexico and Michigan.

(Writing by David Bailey. Reporting by James Kelleher, Jeff Mayers, Susan Guyett, John Rondy, Andrew Stern, Mary Wisniewski and Jim Lekrone; Editing by Peter Bohan and Greg McCune)

 © 2010 Thomson Reuters. Click for Restrictions.

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