OLYMPIA — Senate Democrats upped the ante in state spending yesterday, proposing a $26 billion budget that more than doubles the tax package proposed last week by Gov. Christine Gregoire.

Overall, the Senate's budget raises more than $500 million through taxes and fees, including one-time proposals that provide a bump in funding just for this budget. After several small tax cuts are taken into account, the proposals would bring in about $480 million.

The bulk of tax money would be raised by a 60-cent-per-pack increase in the cigarette tax, a $1-per-liter increase in the liquor tax and a revised form of an estate tax eliminated by the state Supreme Court last month.

"We did not jump off the cliff at all," said Senate Ways and Means Chairwoman Margarita Prentice, D-Renton, who became the Senate's chief budget writer when Democrats took majority control of the chamber in January. "We believe that we've pointed ourselves in the direction the citizens of this state want."

Sen. Joe Zarelli, R-Ridgefield, the ranking Republican on the Ways and Means Committee, called the Democrats' budget "unsustainable, irresponsible and unstable." In a statement, he said: "It completely abandons the idea of prioritizing government services and goes straight for the taxpayers' pockets."

There appeared to be more similarities than differences between the Senate's budget and Gregoire's $25.8 billion proposal. Both include pay raises for teachers and state workers and largely avoid major cuts in services. Both budgets also use a combination of taxes, one-time fixes and fund transfers to help close a budget shortfall projected at more than $1.5 billion.

And, like the governor's budget, the Senate proposal does not solve the problem of state expenses growing faster than money collected from taxes. Another shortfall is likely two years from now. "We're not out of the woods. It's going to take us a while," Prentice said.

House Democrats are expected to come out with their own budget proposal next week. House Majority Leader Lynn Kessler, D-Hoquiam, said it would likely have a tax package that's in between the Senate's and the governor's. It's also expected to include a cigarette tax and an estate tax.

Gregoire yesterday praised the Senate's budget in general terms but took issue with the tax package, which includes variations of the governor's cigarette- and estate-tax proposals. Her tax package would raise about $200 million. "I'm concerned about their level of revenue and their level of taxation," she said.

The single biggest savings in the Senate's budget comes from the state pension system. Democrats propose saving more than $300 million by making changes to the system, including deferring certain contributions. Even so, the Senate's proposal provides $200 million more for the pension system than the governor's budget does.

In addition, the Senate budget transfers more than $170 million in surplus money from other accounts, such as the state toxics accounts.

The budget includes a long list of other cuts and tweaks. For example, $7.4 million would come from eliminating the Washington Reading Corps, a program aimed at improving student reading skills. An additional $12.7 million would be saved by eliminating the Promise Scholarship program.

The budget would raise $8.2 million by requiring certain residents getting government medical assistance to pay a $3 co-pay per prescription.

The Senate proposal boosts spending in several areas. It would increase enrollment in state colleges and universities by 8,100 students to help meet growing demand. The budget would spend $108 million to expand the State Need Grant program for students from low-income families.

The budget also provides several hundred million dollars for pay raises and health benefits for state workers and teachers, and pays for Initiative 728, aimed at reducing school class sizes. Like Gregoire's budget, the Senate proposal calls for using money raised from cigarette and estate taxes to pay for the initiative.

The Senate's cigarette tax would raise $168 million. The tax increases by 60 cents a pack in July and another 20 cents on July 1, 2007.

The proposed estate tax would raise $135 million. The state Supreme Court last month abolished an estate tax collected by the state. The Senate's budget would bring back the tax in a different form.

Under the old system, estates valued at $900,000 or more would have been subject to taxes. Under the Senate's new proposal, the threshold would be $1.5 million in 2005, and $2 million after that.

The $1-per-liter liquor tax would bring in about $50 million during the next two years.

The Senate's budget drew criticism from business groups and praise from public employees, health-care advocates and education groups.

At a Ways and Means committee hearing later yesterday, grocery- and convenience-store owners urged holding off another cigarette-tax increase. Aside from resulting in reduced sales, they said, previous tobacco tax increases also have made a carton of cigarettes so valuable that many stores have experienced increased break-ins and have had to take expensive security measures. A liquor-industry representative pointed out that Washington's liquor taxes are already among the highest in the nation.

Several small-business lobbyists cautioned that restoring the estate tax could force some family-owned businesses to sell.

The Washington Education Association, the state's largest teachers union, praised the Senate Democrats for restoring funding for I-732 and I-728, two voter-approved initiatives to raise teacher salaries and decrease class sizes.

Andrew Garber and Ralph Thomas: 360-943-9882