"We're going to have to sacrifice"

OLYMPIA — Gov. Christine Gregoire said Monday that sacrifices will have to be made to close a projected $3.2 billion shortfall in the next two-year budget.

"We're in a period in history where we're going to have to sacrifice," the governor said in an interview at her office. "All of us together. And not blame or get angry about it, but step up to it. Take it on as a challenge as an American and make us tougher and make us stronger through it."

Gregoire said pretty much everything is being considered when it comes to closing the gap, which could get even bigger before the Legislature meets in January.

One exception, she said, is reallocating proceeds from a national tobacco settlement she negotiated in 1998 as the state attorney general.

The settlement brings in millions of dollars to Washington, about $120 million alone next year. The money mainly goes toward paying for health care.

She also reaffirmed a pledge made during the campaign not to increase taxes or fees to help balance the budget.

The governor said she's considering dozens of options, including suspending certain state programs and possibly eliminating some entirely. She wouldn't say which ones.

In addition, the governor said, lawmakers could soon face a choice of either giving state workers a pay raise or laying people off.

She wouldn't tip her hand about what she plans to do in her budget, which is expected to be released in mid-December.

Two years ago, when the economy was still humming, Gregoire proposed a budget with large spending increases and said at the time, "I love my budget."

That won't be true this time, she said. "I have no expectations I'll love my budget. It's not going to happen."

Here are some excerpts from an interview on Monday:

Q: Would you consider using money from the tobacco settlement to help close the budget shortfall?

A: No. ... We use that money for health care. ...

Sure it's cash, but the results of the cash is you don't have the money for health care tomorrow.

Q: Pay increases for state workers and teachers is worth about $1 billion. What are your thoughts on that?

A: I have been honest with labor unions all the way along, in which I've said to them: You want pay increases? Would you really advocate that that be done at the expense of people's jobs? Because depending on whether the national economy turns or not, that may be the choice. It may be the choice between really fundamental basic programs and pay increases. The Legislature makes the ultimate decision.

Q: So it feels to you like it's shaping up to be a choice between pay increases or jobs?

A: I wouldn't tee it up just exactly as you said, but I think the Legislature is going to have to ask themselves, 'Do we want to take these programmatic cuts, which is jobs as well as services, or do we want to give pay raises?' And they are going to have a tough choice.

Q: There's been speculation lately about layoffs in state government. For state workers concerned about that, what can you tell them?

A: I'm not trying to add to the unemployment rolls. But at this juncture, without knowing what the November forecast is and what's going to happen to the national economy, I can't guarantee anything.

Q: Can you give me examples of different things that might be done to address the shortfall?

A: I can't yet. I haven't had enough time to work with Victor [Moore, the governor's budget director] on it. And they've given me a list of 87 ideas. I spent my weekend going through those 87. ... I told them which ones I'd like to have more information on.

Q: How painful do you think this budget will be?

A: We're going to not be able to do things I think we should and want to do. We're going to take cuts where I don't want to take cuts. But I'm not going to have much alternative. It is a tough time. ... It is a time to sacrifice.

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