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(CNN) -- There were a handful of empty chairs in the Wisconsin Capitol Tuesday as Governor Scott Walker delivered his biennial budget address, defending a proposal that would curb the collective bargaining rights of most public employees.
"Democracy does not just expect differences, it demands them," Walker said, referencing a showdown with 14 Democratic senators who fled the state in an effort to prevent a quorum on a bill that drew thousands to Madison in protest for a third consecutive week.
The lawmakers remained absent for Walker's address.
Meanwhile, the Republican governor defended his proposal and lauded the anticipated savings to the state budget should it pass.
"Our budget reduces all funds spending by $4.2 billion, or 6.7 percent, and decreases the structural deficit by 90 percent from $2.5 billion to $250 million," he told members of the state legislature. "That's over $2 billion we are saving from future obligations and for future generations."
But Walker also threatened major layoffs -- including teacher layoffs -- should absentee Democrats decide not to return to the Senate chamber in time to pass the bill. The state faces a March 16 deadline to balance the budget, officials said.
"Wisconsin is broke," he added. "It's time to start paying our bills today so our kids are not stuck with even bigger bills tomorrow."
Passage of the budget repair bill, which would apply to the current spending plan, would limit collective bargaining to wages. Any pay increases beyond the rate of inflation would be subject to voter approval.
It would also require public workers -- with the exception of police and firefighters -- to cover more of their retirement plans and health care premiums.
South of the border in Grayslake, Illinois, Senate Democrats criticized the measure.
"The governor's budget was a continued assault on the middle class," Senator Mark Miller told reporters. "He is balancing the budget on the backs of working class and ordinary taxpayers, while at the same time giving tax breaks to corporations."
Union leaders have agreed to pay more for benefits, but view restricting bargaining rights as tantamount to an assault on workers' rights.
"Walker is not looking for compromise," said Democratic Senator Fred Risser.
Meanwhile, crowds of demonstrators gathered outside the building chanting, "This is our house!" and "This is what democracy looks like!"
Earlier Tuesday, one Republican lawmaker said he crossed the state line to meet with Wisconsin's AWOL lawmakers.
Senate Majority Leader Scott Fitzgerald said Democrats asked to meet him to begin dialogue over the controversial budget repair bill.
"I made it very clear that if I was going to meet with them, it can't be about compromise about the budget repair bill itself," Fitzgerald told CNN. "It had to be about other items, maybe down the road. Or, the way we handle ourselves once they come back."
During the two-hour meeting, Fitzgerald said, he identified at least seven Democrats whom he said would like to return to the Senate, but are contending with what he described as union pressure to remain out-of-state.
Walker, in the meantime, is getting an assist from national Republicans.
The Republican Governors Policy Committee, a wing of the Republican Governors Association, launched a new television ad Tuesday defending Walker's rigid stance on his budget bill.
The ad claims that Walker is simply trying to balance the budget without raising taxes and asking state employees to contribute more to their own benefits, "just like everyone else."
Several labor groups have already run ads attacking Walker.
Meanwhile, in Ohio, thousands gathered in Columbus Tuesday to protest a Republican-backed proposal that would curtail public workers' bargaining rights and strip their right to strike.
As in Wisconsin, Democratic lawmakers have labeled the move as union-busting, while their Republican counterparts argue that it's necessary to address fiscal reform.
In Indiana, Democratic lawmakers may have torn a page out of the Madison book after also fleeing to neighboring Illinois.
The group remained AWOL on Tuesday, extending the stalemate over a GOP-backed proposal that union supporters say will restrict workers' rights.
Wisconsin is confronted with a looming $137 million budget shortfall at the end of the fiscal year, June 30. The state faces a $3.6 billion budget gap by 2013.
Walker's proposed bill was passed by lawmakers in the state assembly early Friday but must still clear the Senate, where absentee Democrats have stalled the legislative process.
Earlier, union supporters seemed encouraged after a Dane County judge issued an order to reopen the Wisconsin Capitol building to the public, after it was closed by police.
Judge Daniel Moeser issued a temporary restraining order to reopen the building, which has been a central location for protesters demonstrating against the budget repair bill.
Hundreds had gathered outside the building on Monday, chanting, "Let us in!" Their yells were met by a group of protesters who remained inside, chanting, "Let them in!"
President Barack Obama also weighed in on Monday, appearing to allude to the growing controversy by telling a group of governors that while "everybody should be prepared to give up something" in the face of new budget realities, "I don't think it does anybody any good when public employees are vilified" or their rights are infringed upon.
The president has publicly expressed support for those fighting to keep collective bargaining in Wisconsin.
CNN's Deborah Feyerick, Ted Rowlands, Eric Fiegel and Peter Hamby contributed to this report