With the state facing a $137 million budget deficit, Governor Walker today has unveiled his budget repair bill for the fiscal year ending June 30, 2011.

Notable changes include a number of reform measures focused on bringing government employee benefits closer to the private sector.

• Pension Contributions – Currently, state, school district and municipal employees who are members of the Wisconsin Retirement System contribute very little toward their pensions. The bill requires that WRS employees, as well as employees of the City and County of Milwaukee, contribute 50 percent of their monthly pension contributions. This amount is estimated to be 5.8 percent of salary for 2011, which is about the national average for private sector employees.
• Health Insurance Contributions – Currently, state employees pay approximately 6 percent of annual health insurance premiums. The repair bill requires that state employees, pay at least 12 percent of monthly premiums, approximately half of what the private sector pays. In addition, the bill directs the Group Insurance Board to implement changes to health insurance plan designs to further reduce premiums by 5 percent and will implement health risk assessments for all state employees beginning on January 1, 2012. Local employers participating in the Public Employers Group Health insurance program operated by the state will be prohibited from paying more than 88 percent of the lowest cost plan.
• Collective Bargaining – The bill also makes various changes to limit collective bargaining to the base pay rate. Total increases cannot exceed the Consumer Price Index (CPI) unless approved by a referendum. Contracts will be limited to one year and wages will be frozen until the new contract is settled. Collective bargaining units will have to take annual votes to maintain certification as a union. Employers will be prohibited from collecting union dues and members of collective bargaining units will not be required to pay dues. These changes take effect upon the expiration of existing contracts. Local police and fire employees and State Patrol Troopers and Inspectors are exempted from these changes.
• Furloughs – Over the last several years, state employees have been required to take furloughs resulting in an across the board pay cut of approximately 3 percent. The Budget Repair Bill will not include additional furlough days for state employees.

These and other actions will leave an estimated gross general fund balance of approximately $107 million by June 30, 2011. The net balance, after deducting the required statutory balance of $65 million, will be $42 million.

A large chunk of savings could come from debt restructuring. The bill authorizes the restructuring of principal payments in fiscal year 2010-11 on the state’s general obligation bonds. These principal repayments will be paid in future years. This provision will reduce debt service costs by $165 million in fiscal year 2010-11.

Since the state is required to make debt service payments by March 15th, the bill must be enacted by February 25th to allow time to sell the refinancing bond. To meet this deadline, the bill could come to the floor as early as next week.