Former Madison Teachers Inc. President Peggy Coyne (center) and others cheer during a teachers rally at the Wisconsin State Capitol on Friday. Credit: Associated Press

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Gov. Scott Walker's law repealing most collective bargaining for local and school employees was struck down by a Dane County judge Friday, yet another dramatic twist in a year and a half saga that likely sets up another showdown in the Supreme Court.

The law remains largely in force for state workers, but for city, county and school workers the decision by Dane County Judge Juan Colas returns the law to its status before Walker signed the legislation in March 2011.

Colas ruled that the law violated workers' constitutional rights to free speech, free association and equal representation under the law by capping union workers' raises but not those of their nonunion counterparts. The judge also ruled that the law violated the "home rule" clause of the state constitution by setting the contribution for City of Milwaukee employees to the city pension system rather than leaving it to the city and workers.

The decision could still be overturned on appeal - the Supreme Court has already restored the law once in June 2011 after it was blocked by a different Dane County judge in a different case earlier that year.

"The decision essentially creates the (2011) status quo for municipal employees and school district employees because it declared the essential provisions of Act 10 to be unconstitutional," said Lester Pines, an attorney for the Madison teachers union and one of its members.

The plaintiffs also included Public Employees Local 61, which represents City of Milwaukee workers.

For now, it appears school districts and local officials will have to return to the bargaining table with their workers in a much more sig nificant way. The decision raises a host of unanswered questions about the significant changes in pay, benefits and work rules that have taken place over the past year in schools and municipalities around the state while bargaining was essentially dead.

Walker criticized Colas and said that he was confident that the state would ultimately win on an appeal.

"The people of Wisconsin clearly spoke on June 5th. Now, they are ready to move on. Sadly, a liberal activist judge in Dane County wants to go backward and take away the lawmaking responsibilities of the Legislature and the governor," Walker said in a statement.

Colas, a former public defender and later prosecutor at the state Department of Justice, was appointed to the bench by former Democratic Gov. Jim Doyle. Colas did not sign the petition to recall Walker.

A spokeswoman for Attorney General J.B. Van Hollen said he would likely appeal the decision.

"We believe the law is constitutional. We are reviewing the decision, but we're planning to appeal," Dana Brueck said.

Under Walker's law, both state and local governments were prohibited from bargaining with their workers over anything besides a cost-of-living salary adjustment. Other issues, such as health benefits, pensions, workplace safety and other work rules, were strictly off limits.

For local workers, all those issues can now be bargained. The ruling also restored local unions' ability to reach so-called fair share deals that require all workers within a given bargaining unit to pay union dues, even if they choose not to join.

The ruling also appeared to strike down for local workers a requirement that they pay half of the contribution to their pensions and, for workers within the state of Wisconsin health insurance system, pay at least 12% of their premiums. Those cost savings have been crucial for local governments and schools in dealing with the more than $1 billion in cuts in state aid over two years that Walker and GOP lawmakers passed last year to close a state budget hole.

In his decision, Colas noted that the law limited union workers to cost-of-living salary increases through bargaining while other employees were free to seek larger raises. Colas said the state lacked a reasonable basis for making that distinction.

Colas also noted that the law grouped workers into different classes, since local police and firefighters kept all their bargaining rights under the law but other workers did not. In making these distinctions, the law ultimately infringed on workers' rights to associate with one another freely and to be treated the same way under the law, the judge found.

The home rule section of the constitution states that the state can only pass laws that uniformly affect cities and villages. Colas found that the law violated that part of the constitution by prohibiting the City of Milwaukee from paying the employees' share of their pension contributions.

Colas ruled against the plaintiffs on two of their claims, saying that Act 10 did not violate the constitution provisions on special legislative sessions and did not violate a prohibition against taking property without due process.

The ruling follows another one last year by Dane County Judge Maryann Sumi, who blocked the law after ruling that legislators violated the state's open-meetings law in passing it. The state Supreme Court later overruled Sumi and restored the law.

A federal judge in Madison has also overturned a part of the law requiring both state and local public unions to hold elections each year among workers to retain their official status. That case is still on appeal.

Union leaders hailed the latest ruling.

"As we have said from day one, Scott Walker's attempt to silence the union men and women of Wisconsin's public sector was an immoral, unjust and illegal power grab," said Phil Neuenfeldt, president of the Wisconsin State AFL-CIO.

Katie Grabowski, a K-3 to K-5 teacher at MPS' MacDowell Montessori School, was getting drinks with friends at Stone Fly Brewery on Friday evening in Riverwest when a friend from Ohio texted her the news about the law being repealed.

"Send me a link," Grabowski told her friend. "Send me your proof."

Then she passed the news on to five teachers and they just stared at her.

"It's really happened," she added. "It's surreal."

Grabowski said she wasn't averse to making changes, but felt strongly that teachers should have a voice in them.

"This fight is going to continue whether Act 10 stays struck down or is held up," she said. "There's still activism and things to be done. We can't just sit around."

West Bend School Superintendent Ted Neitzke said he was surprised to hear the law was reversed.

The West Bend district is low-spending, so with the state cutbacks in education spending, Neitzke said the district had to take advantage of the law and make significant changes to health care and benefits.

"We've moved so far as a system with these changes," Neitzke said, adding that reverting to pre-Act 10 times with the current revenues would pose a significant problem.

"We don't have the money to pay for what we used to do," he said.

Mark Lichte, superintendent of Lake Country schools in Waukesha County, said his district approved a base wage increase for this current school year of 2.3% for teachers Tuesday night.

Lichte said it would be "interesting" if the repeal of the law were retroactive and affected this year's contract.

"If it goes retro, that would be problematic," he said.

Assembly Minority Leader Peter Barca (D-Kenosha) called the ruling a "huge victory for Wisconsin workers."

"This decision will help to re-establish the balance between employees and their employers," Barca said. "The decision gives us an opportunity to get back to the Wisconsin values of sitting down and working together to iron out differences, not taking away the constitutional rights of our citizens."

Rep. Robin Vos (R-Rochester) said the decision could throw local governments into chaos if it is not stayed by a higher court.

"A judge living in the fantasy world of Dane County has decided they are going to substitute their singular opinion as opposed to the collective will of Wisconsin, through the Legislature and the recall process. We have litigated, reviewed and elected people because of Act. 10. In each case, they say the law works. And it is," Vos said.

Jodie Tabak, a spokeswoman for Milwaukee Mayor Tom Barrett, said the city attorney's office would review the decision and report to the mayor on Monday.

Jim McLaughlin of the Journal Sentinel staff, reporting in Milwaukee, contributed to this report.