Gov. Gregoire proposes plan to fix state’s budget

OLYMPIA — While Gov. Chris Gregoire was saying, “Let’s get to work,” Republicans were replying, “Let’s get real.”

In her State of the State address Tuesday, Gregoire outlined an agenda for the 60-day legislative session that included government reforms, creation of 40,000 jobs and saving about $780 million in state programs that she put on the chopping block in her December proposed supplemental budget.

Legislators returned to the Capitol on Monday for a session in which they will have to find a way to bridge an estimated $2.6 billion or more shortfall in the 2009-11 supplemental budget.

“It’s an understatement to say this year will be incredibly challenging,” Gregoire said in her speech. “It will test us — and the values we hold — like no other year. But this year also will be long remembered. We have been called on to steer our state through one of the most difficult chapters in its history.”

The latest projected deficit could mean even deeper cuts to state programs than came in the 2009 session, when lawmakers faced a $9 billion shortfall.

Gregoire proposed a budget in December that slashed $1.7 billion from state programs. But in a second budget unveiled after her speech Tuesday, she proposed buying back several programs she considered too vital to cut.

In her second budget, Gregoire proposed to restore, among other programs:

-- $165 million for levy equalization money for public schools;

-- $160.5 million for the Basic Health Plan that provides coverage to 65,000 low-income people;

-- $146.4 million for the Need Grant college financial aid program that supports 12,300 students;

-- $84.5 million for a redesigned General Assistance-Unemployable program that gives grants to about 23,000 people who cannot work;

-- $42 million for all-day kindergarten, gifted student programs and Reading Corps;

-- $39.5 million for subsidized child care for families receiving Temporary Assistance to Needy Families, the state’s welfare program.

Gregoire said she hopes to use federal money to buy back some programs, and she proposed closing some tax loopholes to bring in additional revenue to pay some of the costs.

It will be up to the Legislature to find a way to pay for $780 million, and that could mean taxes.

“Like you, I do not want taxes to harm the economic recovery of our families or our businesses,” Gregoire said during her address. “But I also cannot abandon my values, eliminate the safety net for our most needy and cripple our economic future.”

To help spur job creation, Gregoire proposed a tax credit for each small business that hires a new full-time employee.

Other actions she suggested included streamlining the process to get business permits, creating a tax credit for rural counties with high unemployment, eliminating 78 boards and commissions, and reducing or eliminating one-third of the state’s 64 small agencies by realigning their services.

The Republican response to Gregoire’s speech was mixed. It included encouragement for her focus on jobs, but concern that new taxes will harm the state’s recovery from the lengthy recession.

Republicans also blamed overspending by majority Democrats as the root of Washington’s budget problems.

“Last year we desperately needed to put our bloated state government on a diet,” said Sen. Jerome Delvin, R-Richland. “Instead, 56 percent of the state’s ongoing programs are funded by one-time money — either funds received from the federal government or diverted from other accounts. When are we going to wake up and live within our means?”

In the official Republican response, Sen. Linda Evans Parlette, R-Wenatchee, said the minority party has a number of ideas for government reform and economic recovery if Democrats will listen.

“We cannot afford for partisan politics to get in the way of constructive change and reform,” Parlette said. “Both parties need to work together and take a fresh look at what we need to do to help the people of our state. This requires a seat at the table and allowing hearings on bills that come from both sides of the aisle. Good ideas don’t have to have a “D” or an “R” attached to them — good ideas are good ideas.”

-- Michelle Dupler: 360-753-0862; mdupler@tricityherald.com