Madison, Wisconsin (CNN) -- As the standoff continues in Madison over a budget bill that would increase the costs of benefits to public employees and curb their collective bargaining rights, Republican Gov, Scott Walker blamed unions for squandering state coffers and impeding fiscal reform.

"We're broke," the governor told reporters Monday. "You really can't negotiate when you don't have money to negotiate with."

Unions argue that collective bargaining -- a process of negotiations meant to regulate working conditions -- has served to protect wages and health care, enforce workplace safety and serve as a means to arbitrate employee grievances.

The bill's supporters say union contracts have hamstrung efforts to address the state's swelling deficit. Its opponents say the bill is an assault on workers' rights.

The budget-repair bill, proposed by Walker to address a $137 million shortfall through June 30, would increase contributions of state workers to their pensions and health insurance benefits. It requires collective-bargaining units to conduct annual votes to maintain certification. It also eliminates the right of unions to have dues deducted from worker paychecks.

Walker says the measures are needed to head off a $3.6 billion budget shortfall by 2013 that could result in thousands of layoffs.

He warned that not passing the proposed bill would result in at least 1,500 government employees being laid off in the short term and could result in upwards of 6,000 workers being laid off in the following budget cycle.

"There are some tough decisions that are going to have to be made on the revenue side and the spending side," said Elizabeth McNichol, senior fellow at the Washington-based Center on Budget and Policy Priorities.

Meanwhile, the number of protesters gathering daily in Madison had dwindled by Monday as a winter weather advisory was in effect for much of the state.

"We're going to continue to fight, but we'll now focus our efforts locally," said Mike Langyel, president of the Milwaukee Teachers' Education Association. "This comes down to raw power politics."

Guitarist Tom Morello of Rage Against the Machine played for the remaining protesters a day after Walker signaled no retreat on the measure.

Morello referred to Walker as "the Mubarak of the Midwest," in reference to the Egyptian leader ousted by popular protest. He accused the governor and unnamed corporate allies of trying to "rob American workers of their fundamental rights."

Last week, 14 Democratic state senators essentially boycotted the legislature and went to Illinois to prevent a quorum from passing the bill. The measure's opponents say they won't allow a vote unless Walker negotiates on the plan to eliminate collective bargaining rights for everything but wages.

All 14 are still out of the state, Sen. Chris Larson told CNN.

"It's all up to Scott Walker," Larson said. "He said when he announced this last Friday that there is no negotiations. He pulled the table away. There's no table to go to. Until he puts it back, there's no table to come back to."

Larson said Walker was trying to change 200 laws with this one bill.

"This is something that's been 50 years in the making," he said of the changes Walker wants. "Things people have marched for in bitter cold. People have died for this right to organize as a group and make sure they have these rights, not just for them but for the generations after them. That's the big fight here. He's trying to reverse this in less than a week. He's just beating up on workers, he's beating up on the middle class."

To break the impasse, Republicans need a single Democrat to cross party lines and rejoin the 33-member legislature to meet the quorum of 20 lawmakers required in a vote on state fiscal issues. Only 17 lawmakers are required for most other issues.

For their part, Democrats need to draw at least three Republican lawmakers to block the bill or otherwise renegotiate the proposal.

Walker rejected such a deal Sunday in an interview on "Fox News Sunday."

The state's protesting teachers, who have shut down classes across the state for a fourth consecutive weekday, are expected to return to the classroom on Tuesday.

Republican lawmakers are also expected to reconvene Tuesday, debating and potentially voting on a number of issues without their Democratic counterparts in attendance.

Some 385,000 workers belonged to a union in Wisconsin in 2009, accounting for more than 15% of wage and salary workers that year, according to the U.S. Bureau of Labor and Statistics.

Wisconsin faces 7.5% unemployment with the average state worker earning $48,348 annually, according to the Washington-based Economic Policy Institute. The U.S. unemployment rate is 9%.

Walker has called the Democratic complaint of union-busting "a red herring" and said significant changes were needed for budgetary reasons, but that powerful public employee unions had been able to block the necessary adjustments.

U.S. Sen. Dick Durbin, D-Illinois, disagreed, saying that anyone who thinks the bill is only about money and the budget would also think that the Reverend Martin Luther King Junior was working only for African-Americans to have access to restaurants.

"There's a much bigger issue at stake here," Durbin said on the NBC program "Meet the Press" Sunday, adding that Walker "is not setting out just to fix a budget; he's setting out to break a union."

Rep. Paul Ryan, R-Wisconsin, said the events in his state are a microcosm of the budget pressure felt by governors and mayors throughout the country:

-- In New York, Mayor Michael Bloomberg presented budget plans last week that could eliminate more than 6,000 teaching jobs.

-- The mayor of crime-ridden Camden, New Jersey, announced layoffs last month of nearly half of the city's police force and close to a third of its fire department.

-- In California, Gov. Jerry Brown imposed a statewide hiring freeze across all government agencies.

-- In Illinois, lawmakers approved a massive tax hike, unveiling a $35.4 billion budget that depends on approving $8.7 billion in new borrowing, largely to clear a towering stack of unpaid bills.

The Wisconsin governor said he hoped the Democratic state senators would return to Madison so debate on the bill could ensue, but he added that all options were on the table if they don't, including a possible contempt proceeding.

One of the missing Democratic state senators, Jon Erpenbach, said all state and local public employees, including teachers, have agreed to the financial aspects of Walker's requested concessions on paying more for employee health care and pensions.

"In return they ask only that the provisions that deny their right to collectively bargain are removed," Erpenbach said. "This will solve the budget challenge."

Walker, however, said it was necessary to change the collective bargaining rules because the alternative would be laying off thousands of state employees.

"I can't have anybody laid off," he said on Fox. "I don't want a single person laid off in the public nor in the private sector, and that's why this is a much better alternative than to losing jobs."

Until Saturday's counter-demonstrators appeared, the growing protests since Monday were largely made up of those against Walker's plan. They remained the clear majority of those marching, with many of them on Saturday drawn by the arrival of Walker's supporters.

White House press secretary Jay Carney spoke about the protests Friday, saying President Barack Obama "is very understanding of the need for state governments, governors, state legislatures to reduce spending to make tough choices to be fiscally responsible."

But he added, "He also feels very strongly that we need not to make this an assault on the collective bargaining rights of workers in any given state.

"He understands public employees need to make sacrifices just like everyone else."

Walker and other Republicans criticized Obama on Sunday for getting involved in the issue, calling it inappropriate.

Meanwhile, a bill to limit the collective bargaining power of some public-sector workers sparked protests in neighboring Ohio, where crowds gathered last week in the state's capitol.

The controversial measure would eliminate tenure as a consideration when deciding on layoffs, require workers to pay at least 20% of their health insurance premiums and institute merit-based pay for some public-sector workers.

CNN's Gabriella Schwarz, Tom Cohen, Casey Wian and Chris Welch contributed to this report