Gregoire: Building to revive economy

Gov. Chris Gregoire's plan to stimulate the economy and create jobs relies largely on accelerating more than $800 million in transportation and other building projects already in the works.

Gregoire also would use $400 million from the state's flush unemployment-insurance fund to increase benefits for unemployed workers and reduce taxes that businesses pay into the fund -- a proposal that's drawn criticism from business groups.

"This is our chance to make change when politics in the past wouldn't let us," Gregoire said at an economic-forecast conference in downtown Seattle, where she detailed her plan Thursday. "Let us find a new way to do business."

The most expensive construction project on the list -- $277 million -- would add ramps to the Interstate 405-Highway 520 interchange in Bellevue. Millions more would go to repaving and other transportation projects throughout the state.

Other projects include new buildings and renovations at the state's colleges and universities, environmental cleanup and work at state prisons. About $10 million would pay to install alternative-energy equipment in government-owned facilities.

The governor also would help homeowners facing foreclosure but had few details for that proposal.

Gregoire said her plan, called Washington Jobs Now, would help create 20,000 jobs over two years. She said she hopes the Legislature will move quickly to approve the package.

All the construction projects -- $390 million in transportation spending and $427 million for other work -- were included in the proposed two-year state budgets that Gregoire submitted to the Legislature last month.

The stimulus package would move the projects to the top of the state's priority list in an effort to put people to work as soon as possible.

"She just tied a bow around things that were already in her budget. Fast tracking this list here," said Rep. Hans Dunshee, D-Snohomish, chairman of the House Capital Budget Committee. "I think it's not a bad strategy."

Most projects would be financed by selling bonds that are paid off over time.

Senate Republican Leader Mike Hewitt of Walla Walla said he is concerned about the longevity of the jobs the governor hopes to create. He also said he wonders if the state has the bonding capacity to pay for the work.

"Our approach would have been doing projects that create jobs at the end, not just the temporary jobs," Hewitt said.

The governor's plan to tap the unemployment-insurance trust fund is the most controversial part of the proposal.

She would use $400 million to temporarily boost benefits an average of $45 a week and to reduce the unemployment-insurance taxes that businesses would pay in 2009. The plan also would expand programs for part-time workers and for displaced workers training for high-demand jobs.

Business groups say it's unwise to draw down the unemployment fund to pay increased benefits when the economy appears to be worsening and more layoffs could be coming.

"The trust fund is there to pay benefits to people when they lose their jobs," said Kriss Sjoblom, an economist with the business-backed Washington Research Council. "They [lawmakers] look at the fund because it is there, and they are grabbing money wherever they can."

But Gregoire said that, with more than $4 billion in reserves, the state's unemployment-insurance fund is the richest in the country and can afford a 10 percent drawdown.

Karen Lee, employment-security commissioner, said the federal government recommends that states have 12 to 15 months of benefits in the bank in the case of a "significant recession." Washington has enough money to cover 21 months of unemployment benefits, Lee said.

Gregoire's trust-fund proposal will be presented to a House committee today. Lee said the unemployment-insurance portion of the plan has to be passed by the House and Senate by Feb. 9 to give the state enough time to calculate tax rates before they are released to businesses March 30.

House Majority Leader Lynn Kessler, D-Hoquiam, said she supports Gregoire's package and expects it to pass through the House.

Senate Democrats earlier this week released their stimulus proposal, which they said would create up to 25,000 jobs. House Democrats are expected to unveil their economic plan later this month.

Jennifer Sullivan: 360-236- 8267 or jensullivan@seattletimes.com