OLYMPIA — The next governor cannot take aim at easing gridlock or improving public schools before dealing with a budget and its big deficit shadow.
It is the transcendent issue in the gubernatorial rematch between Democratic Gov. Chris Gregoire and Republican challenger Dino Rossi.
Thus far neither candidate is revealing many specifics on how to erase the $2.7 billion in red ink predicted in the state’s next two-year budget.
A high-profile moment for revelations comes this Saturday when the two hold the campaign’s first televised debate.
“I think it is the perfect opportunity for them to distinguish themselves on what the government should and should not do,” said Jason Mercier of the Seattle-based Washington Policy Center, a research and education think tank. “The budget is the most important thing a governor puts forward because it drives all the policies.”
Whoever wins the election must, by law, sign a balanced budget.
That will be challenging. The nonpartisan staff of the state Senate Ways and Means Committee forecasts a $2.7 billion shortfall. The figure drops to $1.9 billion if $801 million in reserves are used.
This forecast assumes revenues are growing but not by enough to keep pace with spending commitments made by Gregoire and the Democrat-controlled Legislature.
“The question is are we going to put more of a burden on people and businesses, or are we going to bring expenses more in line with revenues,” Mercier said.
Gregoire said Monday the state will live within its means and has already responded with cost-cutting steps such a hiring freeze, cutbacks in travel and a four-day workweek in some state departments.
“We’re going to set priorities and fund priorities,” she said. “We’re not going to be able to do everything, we never can.”
For the most part she and Rossi cite their own records and point to their opponents’ history as indicative of what to expect when funding decisions will be made.
In 2003, Rossi, then a state senator, headed the Senate Ways and Means Committee. He played a leading role in the authorship of a spending plan that dealt with a deficit nearly as large as the one now facing the state.
“Not raising taxes and protecting the most vulnerable. That’s the framework I used in 2003 and the framework I will use today,” he said.
He said those he wants most to protect are “people that may not otherwise be able to help themselves” such as the mentally ill, the developmentally disabled, children placed in the care of the state and those in nursing homes.
He’s promised that education won’t lose money and believes public schools will get a bit more next time, though he stopped shy of guaranteeing it.
Rossi is challenged on his “not raising taxes” claim because his budget included a new bed fee on many nursing home residents. He’s said that levy came at the behest of the association representing nursing homes.
Gregoire signed legislation repealing the fee in 2006.
When she entered office in 2005, the state faced a $2.2 billion deficit and she balanced the budget in part by increasing taxes on cigarettes and hard liquor. She also rewrote and reinstated the estate tax.
Money from all three sources was earmarked for education and health care.
“As attorney general I helped negotiate the largest settlement ever against the tobacco industry. Why wouldn’t I raise taxes on cigarettes?” she said Monday.
“I did sign a bill that put a liquor tax in place. My opponent had made significant cuts to vital programs and I was left cleaning up his mess,” she said. “It was critical that we find ways to put 40,000 kids back on health care, and instituting a sin tax helped us put focus back on the people’s priorities.”
Balancing the current budget that ends June 30, 2009, occurred with record revenues filling the state coffers. Today there is an $801 million reserve, of which $442 million is in a hard-to-access “rainy day” fund.
By law, win or lose, Gregoire must deliver a proposal for the next budget to the Legislature in December. Gregoire insisted she’s not settled on any programmatic changes.
“We’re going through the process right now. Those programs that are not performing well may not be funded,” she said.
Rossi said because Gregoire raised taxes once, she will do so again rather than cut spending. He said she’s exhibited the behavior of a “classic tax-and-spend liberal” in her first term.
“I guarantee what she is working on is she is going to raise taxes. Why wouldn’t anybody believe she wouldn’t do it,” he said. In the past he’s cited her comments to the Spokesman-Review as evidence she’s not against an income tax.
“I’m not going to accept a budget that is going to increase taxes and ask people for more money they don’t have,” he said.
Gregoire responded sharply on her record involving taxes.
“Let’s get the facts straight first. I capped property tax growth at 1 percent, lowered B&O (business and occupation) taxes and lowered sales tax on farm machinery,” she said.
“I am opposed to an income tax and I’m absolutely not talking about taxes, nor do I intend to talk about taxes when the national economy is challenging our families,” she said.
Saturday’s debate will be televised live at 9 p.m. on KOMO Channel 4.
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