Wash. gov offers no-tax budget for $6B shortfall

Sticking to her campaign pledge, Gov. Chris Gregoire on Thursday unveiled a no-new-taxes budget plan that would fix a nearly $6 billion deficit by whacking spending, suspending voter initiatives and borrowing some money.

Spending cuts would be felt across state government, including K-12 and higher education, social services, prisons, health programs and state parks.

The proposal will draw howls of protest from all corners of the state, particularly among interest groups who benefited during the Democratic governor's first term, when state spending jumped by about a third.

The Legislature, controlled by Democrats, convenes Jan. 12 to begin its work on the two-year budget. Unlike Gregoire, majority lawmakers have not explicitly ruled out some form of tax increases.

In a statement, Gregoire cast the national recession as both the culprit behind Washington's deficit and the reason not to raise taxes on consumers and businesses.

"Our state is not immune and our revenue - largely reliant on a sales tax - is down dramatically, resulting in the largest budget gap in state history," she said.

As expected, Gregoire would help bridge the deficit by suspending, at least partially, two voter-backed education initiatives. Teacher pay raises would be skipped entirely during the 2009-2011 fiscal years, and money for reducing class sizes would be cut by about a quarter.

Gregoire wants to drop pay raises for state workers, who recently wrapped up contract negotiations calling for average yearly raises of about 2 percent, and raises for home-care workers.

Skipping the raises for teachers, state employees and home-care workers would save about $678 million over two years, Gregoire said.

Gregoire's budget also would delay stepped-up training for home-care aides, the most expensive chunk of Initiative 1029, which was approved just last month.

She also would tap the state's new Rainy Day Fund, created by voters for budget emergencies, and pull about $204 million in lottery proceeds out of the state's construction budget, replacing it by selling bonds.

Higher education would take a hit, with across-the-board budget cuts of 13 percent at four-year schools and 6 percent for community and technical colleges.

Students would pay more to help fill that gap, with proposed tuition hikes for resident undergraduates ranging up to $450 per year, but Gregoire also proposes a bump in financial aid.

Big chunks of savings will come from social and health services, which are seeing overall cuts of more than 12 percent.

Money for the state's Basic Health Plan, which provides health care for people making less than $22,800 a year, would be cut 42 percent, and enrollment reduced. The projected savings: $252 million.

Gregoire also would end cash payments and treatment subsidies for disabled people and addicts who cannot work.

Eliminating those grants would save about $161 million, and cutting health coverage saves another $251 million - although Gregoire said health coverage for old, blind and disabled people under the program would continue, along with those who qualify for Social Security disability.

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On the Net:

Governor: http://www.governor.wa.gov

Legislature: http://www.leg.wa.gov