Gregoire warns of 20 percent cuts if budget stalls

OLYMPIA — Gov. Chris Gregoire warned Wednesday that she could be forced to make across-the-board cuts of 20 percent if the Legislature doesn't come up with a budget-balancing agreement.

Gregoire expressed frustration about the stalemate between the House and Senate over a tax package.

"They were here too long as of Monday morning," said Gregoire, who had initially called for lawmakers to finish the overtime legislative session by last Sunday.

She said that if lawmakers haven't wrapped up their work to patch a $2.8 billion budget deficit by the time the special session ends next month, she won't call them back to town unless they have a firm deal. If they don't, she says, she'll have no choice but to make drastic cuts to state agencies and programs.

"Every day we don't get a solution is costing us more cuts, there's no question about that," she said. But, "calling it a day and doing 20 percent cuts, I don't know when that would occur."

Most lawmakers were away from the Capitol on Wednesday, with only budget negotiators left behind to continue working toward agreement on a tax package and a spending plan.

The two chambers have been unable to agree on which taxes to raise to help balance the budget. The Senate's tax proposal is centered on a temporary two-tenths of a cent sales-tax increase, while the House's package, based on a compromise proposal from Gregoire, focuses on closing tax exemptions and collecting more money from service businesses.

House Majority Leader Lynn Kessler, D-Hoquiam, said her caucus doesn't have the 50 votes needed to pass a sales tax.

"I don't know what we do," she said. "We're all frustrated."

Blocking McKenna

Also Wednesday, Gregoire said she's open to the idea of blocking Republican Attorney General Rob McKenna from using public money to challenge a federal health-care overhaul. Democratic-majority lawmakers have raised the idea of adding such a ban to whatever budget proposal they ultimately agree to.

McKenna has added Washington to what is now a 13-state lawsuit challenging the constitutionality of the health-care bill signed by President Obama on Tuesday.

Gregoire said she believes in the independence of the attorney general but that using public money to pursue litigation she and other leaders are opposed to is "a different question for me."

Gregoire said she hasn't been presented with any proposed state-funding bans targeting the lawsuit, so "I'll wait and see." But when asked if she's open to the idea, she responded: "I am."

Kessler said that since lawmakers are still hammering out the budget, they're still weighing such budget language.

"I think we're all concerned about how our money is being spent," she said. "And this is certainly nothing we agree with. Why is he doing it? He doesn't need to do this."

McKenna said he thought it was important to join Florida's lawsuit because "health-care reform is too important to be based on an unconstitutional foundation."

"This is not a policy brief that we're filing," he said Tuesday. "It's a legal brief. We're challenging some specific provisions of the bill."

McKenna spokesman Dan Sytman said the costs to Washington state are "minimal" because Florida is the lead state on the lawsuit, which claims Congress doesn't have the constitutional right to force people to get health coverage. It also says the federal government is violating the Constitution by forcing a mandate on the states without providing resources to pay for it.

Exemption reversed

In another swipe at McKenna, Gregoire's budget director has informed McKenna that his agency is no longer exempt from having to get individual approval for costs on such things as litigation consultants or expert witnesses.

Under a cost-savings bill signed into law by Gregoire last month, agencies are prohibited from entering into personal contracts, or filling vacancies, unless they apply for individual exemptions.

McKenna's office was granted the blanket exemption on Friday, and it was withdrawn on Tuesday, the same day the lawsuit was filed.

Gregoire said that it was withdrawn after lawmakers raised concerns about it.

"There's a level of frustration that they were not consulted" about the lawsuit, she said.

Sytman said that the move "puts us in a very difficult situation."

"We work on dependency cases where there are children in dangerous situations. We're defending multimillion-dollar lawsuits against the state," he said. "It presents a roadblock in our effort to achieve a positive outcome in those kind of cases."