Gregoire proposes $4 billion increase in spending

OLYMPIA — Saying we're in "exciting times," Gov. Christine Gregoire on Tuesday proposed dramatically increasing state spending by more than $4 billion over the next two years.

Gregoire's 2007-09 general-fund budget of nearly $30 billion would add nearly 3,800 new state jobs; spend about $1 billion on pay raises for teachers and state workers, $343 million for public schools and $110 million for health-care programs; and put millions more into state parks, higher education and early learning.

It also would burn through most of a projected $1.9 billion budget surplus and possibly set the state up for a shortfall of more than $600 million when lawmakers have to put together a new budget in 2009.

"These are good times, these are exciting times. Now is the time to make the investments in the future," Gregoire said. "If we fail to make the investments ... then the future can say, 'Shame on us.' We had the opportunity and passed it up."

The governor said her budget was prudent. She noted that it would place $605.6 million into reserves, which would include money in a proposed protected "rainy day" account. However, her own budget office projects about a $650 million hole in the next 2009-11 budget cycle, even if the state spends all the money Gregoire wants to put into reserves.

"I believe she's trying to do good things in the budget, but we're trying to do too much all at once and that puts us into a structural problem," said state Sen. Joe Zarelli of Ridgefield, the ranking Republican on the Senate Ways and Means Committee.

"We need to remember we're setting up that rainy-day fund not to protect ourselves from bad spending habits but in the event of a rainy day," he said.

Rep. Gary Alexander of Olympia, the ranking Republican on the House budget committee, said he couldn't find a single place in the budget where Gregoire reduced spending.

"Even though it's good times, every budget should look at ways to find efficiencies," Alexander said.

Alexander said he worries Gregoire's budget will actually be the "low water mark" and that Democrats in the House and Senate will increase spending even further.

Lawmakers will take up Gregoire's budget proposal when they meet in January. Both the House and Senate will draft their own budgets and then all three branches — which are all controlled by Democrats — will hammer out a compromise.

Democratic leaders, including House Speaker Frank Chopp, praised the governor's budget.

House Appropriations Chairwoman Helen Sommers said she figures House Democrats will propose to spend about the same amount as the governor's budget.

A 34-year veteran of the Legislature, Sommers shrugged off questions about whether Gregoire's budget would set the state up for a big shortfall down the road.

"I've long ago learned it's no use worrying about it," said Sommers, D-Seattle. "You just do your best."

Lawmakers passed a $26 billion two-year budget in 2005. Earlier this year, with surplus tax money rolling in, they bumped up overall general-fund spending to about $26.5 billion. They also set aside an additional $740 million into special accounts for use in the new budget lawmakers will start crafting in January.

The proposal Gregoire released Tuesday would bump general-fund spending from $26.5 billion to almost $30 billion. And she also would spend the $740 million set aside to help cover areas such as pensions and teacher salaries. That would boost her overall spending increase to around $4.2 billion — 15 percent more than the current budget.

The governor's proposed increases include:

• An almost $197 million effort to boost math and science programs in schools. The initiative would reduce class sizes in those subjects and hire 750 additional teachers, among other things. The new teachers aren't counted in the 3,800 proposed increase in state workers.

• More than $200 million for higher education, including a proposal to freeze tuition at community colleges at current levels and increase enrollment at the state's colleges and universities by 8,300, including 3,300 students in high-demand fields such as engineering.

• Nearly $31 million in state money and $30 million in federal funds to provide health coverage to an additional 32,000 low-income children. About two-thirds of the nearly 73,000 uninsured children statewide are eligible for Medicaid, the state's insurance program for the poor. Gregoire proposes an aggressive outreach effort to get those kids enrolled.

• A boost of $26 million for childhood immunizations. That includes additional money for rotavirus vaccines and human papilloma virus (HPV) vaccines for girls between 11 and 13 years old.

• An additional $9 million to promote tourism and $856,000 for a marketing campaign to promote Washington as a tourism destination during the 2010 Winter Olympics in Vancouver, B.C.

Special-interest groups, including the Children's Alliance and the Washington Education Association (WEA), the state's largest teachers union, were largely happy with the plan.

"The governor deserves full credit for making a tremendous new investment in education," said WEA president Charles Hasse, adding that more still needs to be done to improve teacher pay and reduce class sizes.

Kriss Sjoblom, an economist at the business-backed Washington Research Council, called Gregoire's budget "disappointing."

The budget, he said, sets the state up for future cuts or tax increases.

"I was expecting better. I heard the governor talk about the need for fiscal responsibility and that she was going to be barring the door. Boy, I'd hate to see what the hordes would do if this reflects a barred door," Sjoblom said.

Wolfgang Opitz, deputy director of the governor's budget office, argued that the projected $650 million shortfall in the future is a lot smaller than budget deficits the state has dealt with in the past.

"We're trying to whittle the size of the future problem down," he said.

Gregoire brushed aside concerns about how much money she wants to spend. "I think the fact that we're headed to that size of the budget is simply an indication that we put people to work and the economy is booming," she said.

"I love my budget."

Andrew Garber: 360-943-9882 or agarber@seattletimes.com