OLYMPIA — I didn’t raise taxes. We’ve got a surplus. She spent all your money. It’s George Bush’s fault.
In their smash-‘em-up rematch for the governor’s mansion, Democratic Gov. Chris Gregoire and Republican challenger Dino Rossi are tossing around claims and numbers — many of them centered on the governor’s major task, overseeing the state budget.
Some of it’s true. A lot of it’s half-true. And in some cases, they’re fibbing. To help sort it out, The Associated Press presents a guide to selected bits of the truth, the spin and the rest.
Rossi’s budget
In 2003, then-Sen. Rossi was a major force in writing a two-year state budget that bridged a deficit of about $2.7 billion. That budget became the centerpiece of his political career.
It’s also one of the principal spots of attack for Gregoire and her allies. They say his budget raised taxes, whacked important programs, and still ended up $2.2 in arrears, which Gregoire had to fix.
He says: “I balanced the biggest deficit in state history without raising taxes and still protected the vulnerable.”
She says: “When I came into office, I inherited my Republican opponent’s $2.2 billion deficit.”
The truth: Rossi’s not telling the whole truth when he says he balanced the budget without raising taxes. And Gregoire isn’t telling the whole truth when she says Rossi handed her a $2.2 billion deficit.
The 2003-05 budget that Rossi helped to write solved the shortfall with program cuts, transfers and some tax and fee hikes. Although he initially wanted a no-new-taxes budget, the final deal included a higher liquor tax and a “fee” on nursing homes.
In Olympia, politicians often like to pretend that anything other than a sales, business or property tax hike is not really a tax increase, because those are the “general” taxes that ding a bunch of people all at once.
Gregoire has played the same game.
On the stump, she’s painted her record on tax hikes as limited to a gas tax increase and restored estate tax that voters approved. In some cases, she also mentions a cigarette tax hike. But liquor and product warranty taxes that also were part of the 2005-07 budget are less likely to be mentioned.
As for that deficit: When lawmakers left Olympia in 2003, the immediate budget was balanced. Rossi left the Legislature to run for governor.
In January 2004, officials predicted the next two-year budget — the one Gregoire ended up writing — would start off with a shortfall of about $1.06 billion.
Deficit projections went up and down before Gregoire proposed her 2005 budget. At one point, the deficit was pegged at about $2.2 billion. But after that, the state got a surge of tax money. State documents say the Legislature dealt with a deficit of about $1.8 billion.
Final note: No matter what either candidate says, Rossi wasn’t the only one writing that budget.
Democratic Gov. Gary Locke started negotiations with a budget that relied heavily on program cutbacks. Rossi, who headed the Senate budget committee, took Locke’s plan and tweaked it, forcing the Democrat-controlled House into a two-against-one showdown.
Rossi and Locke largely prevailed. But plenty of Democrats voted for the budget, and Locke signed it into law.
The next deficit
She says: “Today, we sit on a surplus … We have literal money in the bank. The projected — and I emphasize the word projected — deficit is for 2011.”
He says: “It’s like having $800 in your checking account, and you owe over $4,000 come January — you’re still over $3,000 upside down.”
The truth: Gregoire is cherry-picking the slice of truth that sounds best while pooh-poohing the bad part. Rossi is being more truthful — there’s a deficit ahead, and the state’s savings won’t be enough to cover it.
Gregoire grudgingly acknowledged some sort of future budget hole when the Legislature adjourned earlier this year. But she continued to answer questions about the deficit by saying the state had a surplus.
Lately, she’s ‘fessed up a little more, but still emphasizes the deficit is not set in stone.
That’s technically true. The state’s balance sheet shows a general fund surplus of about $87 million, with about $440 million in the Rainy Day Fund — a savings account for emergencies — through the 2007-09 budget.
So we do have “money in the bank.” But for practical purposes, it’s already spent.
If she had to write a new budget for the 2009-11 fiscal year right now, Gregoire would be facing a big deficit. That’s because current state spending, if carried forward, would likely cost about $3.2 billion more than Washington is expected to have by the end of the 2011 fiscal year.
In their most recent debate, Gregoire hinted at a savings plan that would bring the deficit down to about $1.9 billion. That plan relies on a series of cutbacks, along with spending most of the Rainy Day Fund. Only a few of those cuts have been revealed. Stay tuned.
Final note: The blame game on the future deficit is another minefield for truth-seekers.
Rossi, of course, blames Gregoire almost exclusively. Gregoire likes to put the blame on Mr. Unpopular, President Bush, saying Washington’s rough economic outlook is simply part of a tanking national economy.
There’s plenty of blame to go around.
The poor national economy certainly has hurt the state’s bottom line, just as a strong economy helps. During Gregoire’s first term, money gushed into the state’s bank accounts, and a hot housing market was the major driver.
When the housing bubble burst, the money dried up. Historians will argue over who’s to blame for the big picture — Bush, Congress, Wall Street, the Federal Reserve, irresponsible consumers and so on.
But Gregoire and the Democrats running the Legislature can’t say nobody warned them. During those periods of surging tax collections, the state’s economic forecasters warned that it probably wouldn’t last.
In the end, voters will be picking a candidate to lead the state through its next period of economic triage. And both can rightfully say they’ve got experience bridging a budget gap.
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