Madison — In just his third month in office, Gov. Scott Walker rewrote Wisconsin history Friday by signing into law his bill to repeal most collective bargaining for public employee unions.

The move comes in the state where a half-century ago public workers first gained widespread ability to bargain together and in the very city where the nationwide public-sector union, AFSCME, was founded. The measure drew an immediate legal challenge.

"For us, we're doing this to lead the way in our own state, to get Wisconsin working again," Walker told reporters. "But if along the way we help lead a movement across the state to pass true fiscal reform, true budgetary reform, to ultimately inspire others across this country state by state and in our federal government . . . I think that's a good thing and a thing we're willing to accept as part of our legacy."

Wisconsin is now among the vanguard of Midwestern states embarking on a new era with their rules for public unions. Indiana Gov. Mitch Daniels, a Republican, signed an executive order in 2005 to eliminate collective bargaining for state employees. Ohio is working on a measure to rewrite its collective bargaining law with public-sector unions.

But the fight in Wisconsin isn't over - Democrats and unions are already filing lawsuits against the proposal and recall actions against GOP senators who approved it.

"It's just the beginning," said Sen. Bob Jauch (D-Poplar). "This is the civil rights issue of this century."

Efforts to recall some of Jauch's fellow Democrats are also under way.

Labor historian Rosemary Feurer of Northern Illinois University likened the bill's potential impact to what occurred in the early 1980s when Ronald Reagan took on the air traffic controllers. Currently, about three-quarters of states allow some degree of collective bargaining for state and local employees.

"The first statewide bill for collective bargaining was passed in Wisconsin. So this is a signal for all the states," she said.

But Larry Sabato, a political scientist at the University of Virginia, said Republicans could feel a backlash for their efforts.

"They've either weakened labor to the advantage of Republicans or they have awakened a sleeping giant that will cause another pendulum swing in 2012, back to the Democrats. How can you know?" he said.

Walker signed the bill privately in the morning and held a separate, ceremonial bill-signing in front of reporters later in the day. He was joined by his cabinet and four Republican lawmakers.

The bill does not apply to unions in the private sector. Walker called those unions partners in improving the state's economy and indicated he was not seeking "right-to-work" legislation that would let private-sector employees opt not to join unions and pay dues. Asked Friday if that meant he would veto such legislation, he said no, without elaborating.

The bill he signed would still allow state, municipal and school workers to bargain over their wages, but any raises beyond the rate of inflation would require a voter referendum. The repeal of most collective bargaining would not apply to unions representing local police, firefighters and State Patrol troopers.

In addition, the law would solve part but not all of the state's immediate budget shortfall, require public employees to pay more for pensions and health insurance, give Walker broad authority over health care programs for the poor and turn 37 civil service jobs into political appointments. But unlike an earlier version, the bill passed by the Assembly wouldn't authorize the sale of state power plants or a $165 million refinancing of state debt.

Layoff notices revoked

Walker said the savings in the bill would prevent layoffs of up to 1,500 state workers over the coming months and thousands more over the next two years. On Friday, he pulled back layoff notices that had been sent to state unions last week.

Meanwhile, Dane County officials filed a lawsuit Friday to immediately block the signed bill from being published and taking the force of law, arguing that legislators hadn't followed the law in passing the bill.

Dane County Circuit Judge Amy Smith ruled that the county did not meet the standard for a temporary restraining order, which calls for the plaintiff to show there would be irreparable harm if the bill is published and becomes law. But Smith ordered the county and the state to come back to court on Wednesday for a hearing on a temporary injunction to block the bill.

The plaintiffs in the court case are Dane County Executive Kathleen Falk, Dane County Board Chairman Scott McDonell and Shannon Maier, a Dane County employee and union member.

The defendants are Secretary of State Douglas La Follette, a Democrat whose office publishes new laws, state Sens. Scott Fitzgerald of Juneau and Michael Ellis of Neenah - the Republican leaders in the Senate - and state Reps. Jeff Fitzgerald of Horicon and Scott Suder of Abbotsford - the GOP leaders in the Assembly.

The county contends there was not adequate public notice at a legislative committee meeting where an amended version of the budget-repair bill was passed on Wednesday. The suit also alleges that the state Senate did not have enough members on hand to legally vote on the bill later that same day.

Republicans deny that claim, saying they consulted with attorneys on the legislative maneuver to ensure it was legal.

The state constitution says that three-fifths of the members elected to the Senate and Assembly must be present to vote on any bill which "imposes, continues or renews a tax, or creates a debt or charge, or makes, continues or renews an appropriation of public or trust money, or releases, discharges or commutes a claim or demand of the state."

In the Senate, that three-fifths requirement works out to 20 lawmakers. Republicans hold 19 seats, and the remaining 14 Democrats in the body left the state Feb. 17 to prevent the bill's passage.

On Wednesday in the controversial committee vote, Republicans took spending measures out of the bill, saying that would then allow them to pass it. The Senate then approved it 18-1, with no Democrats present.

At the court hearing, Madison Teachers Inc., represented by attorney Lester Pines, asked to intervene. The union contends the law should be stopped from taking effect for the same reasons.

La Follette, a Democrat who opposes Walker's bill, said that he had already received the signed bill from Walker's office. By law, he would have to publish the bill within 10 days unless a court blocked him, he said.

To publish a bill, La Follette said, his office schedules a date for publication and then arranges for the state's official newspaper, the Wisconsin State Journal, to print a notice with a short summary of the bill. That would leave Monday's paper as the first opportunity for the bill to be published because the state doesn't publish bills over the weekend.

La Follette said Walker has asked him to publish the bill on Monday, but that he will not do so.

"There's too much happening," La Follette said of the court cases. "I think it would be prudent to wait a few days."

La Follette, who has served as secretary of state since 1975, except for a four-year stint in the 1980s, said he can't remember a time that a court blocked him from publishing a bill.

Assembly Minority Leader Peter Barca, a Kenosha Democrat, made a complaint Thursday similar to the county's lawsuit to Dane County District Attorney Ismael Ozanne. Ozanne said Friday the matter is a "high priority" for his office, and he has already had investigators interview Barca.

In another Dane County case, Circuit Judge John Albert heard a proposal from state Assistant Attorney General Steven Means for the court to appoint a special master to handle disputes related to public access to the Capitol. Albert told Means and attorney Peg Lautenschlager, representing organized labor, to come back to court on Monday to see if the idea is workable.

Layoff claim disputed

Walker had said that without the passage of the bill the state would have laid off workers in early April.

But Rep. Jennifer Shilling (D-La Crosse) noted the bill did not address the entire $137 million shortfall for the state in the current fiscal year ending June 30. Lawmakers still need to close a $99.5 million gap before June 30.

"How has our financial condition changed so drastically that layoffs are no longer imminent?" Shilling said in a statement. "I'm glad that Walker decided to rescind the layoff notices, but public employees should have never been used as his political pawns. The level that Republicans have stooped to in order to pass this sham of a bill is disgraceful."

Walker said Friday in an interview with the Milwaukee Journal Sentinel that he would start considering next week the question of how to resolve the remaining state shortfall, including the possibility of pursuing the $165 million refinancing deal that had been stripped from the bill.

Meanwhile Friday, more of the Democratic senators staying in Illinois returned to Wisconsin and prepared to appear at a Capitol rally Saturday that is expected to draw thousands.

Sen. Jim Holperin said he was back in Eagle River and had already attended one pro-union rally in his district. Reached by phone Friday morning, Sen. Chris Larson of Milwaukee was preparing to head back to his home.

Bill Glauber of the Journal Sentinel staff contributed to this report.