Cutting $5B 'may keep you awake,' Gregoire warns lawmakers

OLYMPIA — Gov. Chris Gregoire told lawmakers Tuesday that to balance the state budget, they must make decisions "that may keep you awake at night because in your heart they just don't seem right."

In her annual State of the State address, Gregoire called on legislators to cut programs and remake government to close a state budget shortfall approaching $5 billion.

The governor said Washington residents' "view of government is pretty clear — they want government to stay focused on its core services, live within its means, and use every taxpayer's dollar efficiently and effectively."

Gregoire has said repeatedly in recent weeks that she "got the message" when voters in November repealed taxes and made it tougher to boost them in the future.

It was striking just how different the speech was from past addresses.

In 2007 when the Legislature was busy expanding state services, Gregoire said: "We have kept our promise to cut class sizes in our K-12 schools. We honored the wishes of voters and approved teacher pay raises. We opened the doors to colleges and universities to more students. We promised to provide health care to more children than ever before — and we delivered."

Those efforts have largely been unraveled since the recession hit.

Gregoire used her speech Tuesday to review an aggressive agenda for the session that, among other things, would revamp oversight of public schools, reduce pension benefits to save money, cut unemployment-insurance rates, and make users pick up more of the cost of parks and other public services.

The governor had announced those proposals before the 105-day session convened on Monday. She's also suggested cutting health-care and social services programs for the poor, reducing education spending and creating a regional taxing district to run the ferry system.

Democrats said the speech was about what they expected, and that it set the right tone.

"It's hard to be in such a tough situation, but it's also nice to have some very clear-cut ideas ... to work off of," said Rep. Mary Helen Roberts, D-Lynnwood.

Republicans, who have complained over the years that Gregoire increased state spending too quickly when the economy was humming, said they liked the broad outlines of what she's proposing.

"I think we share those common goals of smaller government," said Sen. Mark Schoesler, R-Ritzville. "We're going to have some disagreements about how to get there."

Gregoire hearkened back to the Great Depression to suggest hope for the future, noting that many of the state's biggest companies, including Boeing, survived and thrived after the Depression.

"Let me be clear," she said. "We will come back stronger than ever and we will provide a brighter future for our children."

For now, though, it's all about cuts and keeping future costs under control.

The governor, for example, talked about the need to control pension and health-care spending.

"We must get a grip on these two budget busters," she said. "Unless and until we do, we cannot invest like we must in the education of our children."

Gregoire has proposed eliminating yearly pay increases for government workers and teachers in Plan 1 pensions, which were closed to new members in 1977. She also would do away with early-retirement provisions in open pension programs. That option would be eliminated only for new enrollees in the pension system. Existing members still could retire and collect benefits before age 65.

In addition, she's set a goal of limiting health-care inflation to 4 percent annually over the next 10 years through changes that have yet to be announced.

The governor also talked about the state adopting a "user-pays policy so that when only a few benefit from the service, they pay for it."

One possibility: the state parks system. "Should those who use the parks pay for their operations and maintenance?" she asked.

Gregoire in her proposed budget recommended largely eliminating funding from the state operating budget for the parks system.

"I know change is hard, especially here in Olympia where too many have become deeply invested in the status quo," Gregoire told lawmakers. "But I think the voters are out ahead in understanding the need for change."

Seattle Times reporter Joanna Nolasco contributed to this story.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com.