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Published: Thursday, May 3, 2012, 12:01 a.m.

Gregoire signs budget saying tax hike needed

OLYMPIA -- Gov. Chris Gregoire signed what she hoped will be her last budget on Wednesday, breathed a sigh of relief then said her successor must come up with as much as $1 billion in new revenue for public schools.
Gregoire signed the blueprint for rebalancing the state budget hammered out in a grueling and caustic special session that ended last month.
It combines spending cuts, transfers from special accounts and a small sum of revenue from new taxes to paper over a $500 million shortfall in the remaining 13 months of the current budget.
The final ledger sheet shows $311 million in reserves of which $265 million is in a constitutionally protected rainy day account and the rest available for unseen emergencies.
"This supplemental budget is lean, but it is not mean and for that I am very grateful," Gregoire said.
A point of pride for her and lawmakers in both political parties is the spending plan does not trim funding for the state's public schools and colleges.
However, it does not increase money for basic education programs in elementary and secondary schools as the state Supreme Court directed in a ruling issued earlier this year. Complying with the court's order will cost an estimated $1 billion in the next budget, Gregoire said.
Come December, in one of her final acts as governor, she will send lawmakers an opening proposal for the state's next budget, and she didn't rule out tucking in a tax increase to cover the tab.
"There simply is not enough money in the revenue stream," she said. "We're trying to fit a size 12 foot into a size 8 shoe."
That puts her at odds with the two leading candidates for governor, Democrat Jay Inslee and Republican Rob McKenna. Both men oppose new taxes to fund schools and contend the dollars needed to satisfy the court ruling can be generated by efficiencies in government and a growing economy.
"To the candidates that are running, we can say 'no new revenue,'" she said. "The reality is we cannot live up to our responsibilities without new revenue. That is my opinion. It is sound. I am not playing games. It's the truth."
Washington's outgoing Democratic governor also signed a stack of hotly-contested reform bills, most of which didn't get approved by lawmakers until an all-nighter April 11 ended their extra session after 31 days.
Among them is a first-in-the-nation requirement for writing state budgets in balance with expected tax collections over a four-year period. She also signed bills to trim early retirement payouts for state workers hired on or after May 1, 2013 and to improve and equalize health insurance offerings among employees in the state's nearly 300 public school districts.
Also Wednesday, Gregoire signed a law which will increase the taxes paid by purchasers of roll-your-own cigarettes starting July 1.
Barring any downturn in the economy, Wednesday marked the final time Gregoire puts her signature on a piece of legislation.
She made light of the moment too.
"Hopefully I've read my last bill, signed my last budget and now I'm going to go away," she said.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.
Story tags » GovernorTaxes

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