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Governor-elect Scott Walker raised the possibility of essentially abolishing state employee unions on Tuesday as one option to control rising employee benefits costs and eliminate the state's budget deficit.

Walker, a Republican, said he's looking at a range of options that would weaken unions, including eliminating their ability to negotiate with the state.

"Anything from the decertify all the way through modifications of the current laws in place," Walker said at a luncheon sponsored by the Milwaukee Press Club at the Newsroom Pub.

"The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers and the people who care about services."

Walker's comments were an escalation of an aggressive posture he's taken with state unions as he prepares to take office on Jan. 3.

Union leaders said Walker and the incoming GOP-controlled Legislature will face a fight if they seek to rewrite a 1971 state law governing state employee unions.

"It's too bad Scott Walker wants to destroy a law that assures the uninterrupted delivery of high-quality public services and has kept labor peace for more than three decades," said Marty Beil, executive director of the Wisconsin State Employees Union. "We certainly prefer negotiation to confrontation."

As Milwaukee County executive, Walker has had a bitter relationship with unions. More than 4,000 workers represented by AFSCME Council 48 have been operating without a contract for nearly two years.

"His union-busting attitude shouldn't surprise anybody," said Rich Abelson, president of the Council 48. "This is very much in keeping with his conservative philosophy.

"In Scott Walker's world, CEOs never make enough money, and there isn't a working person who deserves what he earns."

But Walker said the state's red ink and his pledge to focus on economic recovery require cuts in workers' health and pension benefits.

"You are not going to hear me degrade state and local employees in the public sector," Walker said. "But we can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots."

As a short-term measure, Walker wants to require workers to make a 5% contribution to their pensions. State union workers have traditionally not contributed to their plans. He also wants to increase employees' share of health costs to 12% - up from 4% to 6%, depending on the bargaining unit. Those changes would save $154 million from January to June 30 alone.

Walker is following the path of other fiscally conservative governors, such as Indiana Republican Mitch Daniels, who used an executive order to rescind collective bargaining and union settlements for state employees on his first day in office in 2005.

A spokeswoman for Daniels said Indiana replaced the accords with a system in which state employees have access to a complaint and hearing process for any contested disciplinary action.

In New Jersey, Gov. Chris Christie declared a state of emergency and made massive freezes in state spending when he came into office in January. He is also planning to cut 1,000 more state jobs next month.

Walker told the Press Club luncheon that he was described by an economic official recently as having a passion for job creation like former Gov. Tommy Thompson and a passion for cutting budgets like Christie.

"I kind of liked that," he said.

State oversight

Private-sector unions in Wisconsin are governed by federal law, but state and municipal-employee unions are governed by state law.

To strip unions of their rights and authority, Walker and the Legislature would have to rewrite the State Employment Labor Relations Act, said Peter Davis, general counsel at the Wisconsin Employment Relations Commission.

The commission handles disputes between state and local unions and the agencies that employ them.

"The right to bargain . . . exists because that's the choice the Legislature made in the past, and they could make a different choice in the future," Davis said.

Currently, state workers in union workplaces do not have to join the union but they do have to pay the equivalent of union dues, Davis said. The state generally also has to bargain with them in good faith for their salary and benefits.

Davis said that lawmakers and Walker could keep a prohibition against state employee strikes while they make changes to the law.

But that doesn't mean unions might not try to strike - union members in recent days have pointed to a strike made by state prison guards in the 1970s after the prohibition on strikes was passed.

Also, state officials probably could not abolish state employee unions.

"They can continue to exist," Davis said. "The question would be, 'Does (Walker) have to deal with them as a matter of law?' "

A more likely scenario, Davis said, is for Walker and legislators to take subjects like health insurance and pensions off the table for collective bargaining. The state already has a long list of subjects that can't be bargained with unions, including the policies and goals of state agencies.

Incoming budget committee co-chairwoman Alberta Darling (R-River Hills) said that she was open to changing state labor laws to make it easier to cut labor costs such as health and pension benefits.

"We can't afford it," Darling said.

The Legislature and Walker would have to abide by any labor contracts reached in the coming weeks.

Democratic Gov. Jim Doyle and outgoing Democratic leaders in the Legislature are working to pass 2009-'11 worker contracts in a lame-duck session, which Walker says would block him from achieving savings through cuts to union benefits, at least until the contracts expire in June.

Doyle and the Democrats say the no-pay-raise contracts are already austere and they have an obligation to negotiate with unions.

Bryan Kennedy, president of AFT-Wisconsin, a union representing more than 10,000 employees, accused Walker of trying to renege on contracts in which the state has reached tentative agreements with his members.

"We are willing to do our part, but make no mistake: Walker is angling to make state employees the political whipping boy for the state of Wisconsin's economy," Kennedy said.