MADISON, Wisconsin (Reuters) – The Wisconsin state Assembly late on Tuesday rejected an attempt to send back to the drawing board a Republican proposal to curb public sector union rights that has sparked large protests and a tense stand-off with Democrats.

Republican Wisconsin Governor Scott Walker warned that thousands of state and local government workers would be laid off if lawmakers do not approve his party's plan to reduce budget deficits.

"We are broke in this state because time and time again politicians of both political parties ran from the tough decisions and punted them down the road for another day," Walker said in an address to state residents.

In a first test vote, the Republican-controlled state Assembly voted against sending the proposal back to a committee for more work. The vote was 56 to 39, with only one Republican joining minority Democrats, according to website WisPolitics.

Hundreds of protesters choked the state Capitol's halls on Tuesday chanting, "It's about rights, it's not about money."

The proposal would strip most collective bargaining rights from many state workers. Walker said it is necessary to close a budget deficit of $137 million for this fiscal year.

Wisconsin Senate Democrats, who left the state last Thursday to deny a quorum for voting on the budget proposal in the state Senate, stayed outside the state again on Tuesday.

Wisconsin has become the flashpoint for a U.S. struggle over efforts to roll back pay, benefits and bargaining rights of government workers. If the majority Republicans prevail, several other states could be buoyed in efforts to take on the powerful public unions.

NATIONWIDE BUDGET WOES

U.S. state and local governments are struggling to balance budgets after the recession decimated their finances. Other states like Texas, Arizona and Ohio are relying mainly on cuts in spending, while Minnesota and Illinois are raising taxes.

The changes sought by Walker in Wisconsin would make state workers contribute more to health insurance and pensions, end government collection of union dues, let workers opt out of unions and require unions to hold recertification votes every year. Collective bargaining would be allowed only on wage increases up to the rate of inflation.

Walker wants the bill passed by Friday as part of a plan to push principal payments on general obligation bonds into future years to save $165 million. Under that plan, the bill must be passed by Friday to allow time to sell the debt.

While Wisconsin has been the center of attention, several other states are considering legislation to limit union rights.

The Indiana state Senate on Tuesday approved a measure to limit the collective bargaining rights of teacher's unions. Indiana House Democrats, like their Senate counterparts in Wisconsin, stayed away from the Capitol, stalling a vote on separate "right to work" legislation.

Thousands of people picketed the state Capitol in Ohio on Tuesday to protest a bill to cut collective bargaining rights for state workers. Ohio's bill goes even farther than Wisconsin's in prohibiting collective bargaining for some state workers.

Hundreds of people also demonstrated on Tuesday to oppose proposed limits to union powers by new Republican governors in New Mexico and Michigan.

(Writing by David Bailey. Reporting by James Kelleher, Jeff Mayers, Susan Guyett, John Rondy, Andrew Stern, Mary Wisniewski and Jim Lekrone; Editing by Peter Bohan and Greg McCune)

SAN DIEGO (Reuters) – A federal judge on Friday rejected a request by news organizations to release search warrant records of Arizona shooting rampage suspect Jared Lee Loughner, saying the investigation was still under way.

But U.S. District Judge Larry Burns said he would consider releasing the materials once a superseding indictment was handed down in the case, which prosecutors said could be by March 9.

And Burns declined a motion by prosecutors and defense attorneys to bar release of Loughner's federal photographs, saying he had no authority to overrule a prior appeals court opinion on such issues.

More than a dozen media outlets have asked that the photos and documents be released by the federal government under the U.S. Freedom of Information Act.

Loughner, a 22-year-old college dropout, is accused of opening fire on U.S. Representative Gabrielle Giffords and a crowd of her constituents at a political gathering January 8 outside a supermarket in Tucson, Arizona.

Six bystanders, including a 9-year-old girl and a federal judge, were killed, and 13 others were wounded.

Giffords, who authorities said was the principal target of the attack, was shot in the head but survived. She is recovering from her wounds at a Houston rehabilitation center.

Loughner has pleaded not guilty to federal charges of attempting to assassinate a member of Congress and attempting to murder two of her staff members.

Assistant U.S. Attorney Beverly Anderson told U.S. District Judge Larry Burns that the matter is now before a federal grand jury and they expect a new indictment by March 9.

Federal prosecutors and Loughner's attorneys both opposed releasing the booking photos, arguing they are prejudicial to potential jurors because they make him appear guilty and that no public interest would be served in unsealing them.

The widely published police mug shot of Loughner, taken shortly after his arrest, shows the accused gunman, his head shaven bald, looking wild-eyed and smiling broadly.

Burns told the attorneys that he had looked at the mug shots and found them less prejudicial than the photos already widely available in the media and on the Internet.

"If someone didn't tell me these were mug shots, I wouldn't have known," he said. "The frontal shot in this case I think is tamer than the picture circulated widely on the Internet."

Prosecutors and defense lawyers have also asked that two search warrants and supporting affidavits remain sealed.

They argued that disclosure of some of the content, including an inventory of books, music, writings and college materials seized from Loughner's home, could undermine his right to a fair trial. Both sides also proposed heavy editing of the documents, which the judge rejected.

Burns said much of the information in the search warrant documents already has been reported, and that it was made public after the searches by law enforcement officials.

(Editing by Dan Whitcomb, Peter Bohan and Greg McCune)

COLUMBUS, Ohio (Reuters) – Thousands of people picketed the state Capitol on Tuesday to protest a bill to cut collective bargaining rights for state workers.

In a local repeat of an issue that has roiled Wisconsin over the last two weeks, state Republican leaders say the bill is necessary to address the state's budget problems, while union leaders say it is designed to hurt unions.

"The intent is to give taxpayers a seat at the negotiating table," said Jason Mauk, spokesman for Ohio Senate Republicans.

Introduced in late January, the bill was scheduled for a state Senate Committee hearing on Tuesday.

Ohio's bill goes farther than Wisconsin's in some ways, Mauk said. While Wisconsin's bill allows collective bargaining on wages, up to the rate of inflation, for state workers, the Ohio bill prohibits collective bargaining for 42,000 state workers in addition to 19,500 workers in the state's university and college system.

This would end a right established in 1983 for Ohio's public-sector workers.

For local governments that bargain with unions representing some 300,000 workers including police, firefighters, and public school teachers, the bill removes health care and some other benefits from the negotiating process.

Like Wisconsin, Ohio has a new Republican governor and Republican majorities in both legislative houses.

"What's happening in Ohio is similar to what's happening in Wisconsin," said Joseph Slater, professor of law at the University of Toledo College of Law.

Slater said there is no correlation between whether a state gives collective bargaining rights to workers and whether they have a deficit.

"I don't think you have to be terribly cynical to think there's a partisan thing going on," Slater said. "Unions, public-sector unions especially, support Democrats with money and foot soldiers more often than they do Republicans."

(Reporting by Andrew Stern and Jim Leckrone; Writing by Mary Wisniewski; Editing by Peter Bohan and Jan Paschal)