<p>As Oregon's leading advocate of smaller government and lower taxes, Russ Walker is preparing to fight a political war on two fronts in the 2006 elections. </p>
<p>Walker, executive director of the Oregon chapter of FreedomWorks - formerly known as citizens for a sound economy, said his group is laying the groundwork for a ballot measure to restrict the ability of unions to tap their members' paychecks for political contributions. </p>
<p>And as the newly elected vice chairman of the Oregon Republican Party, Walker will make it a top priority to help the GOP finally recapture the governor's office after five straight losses to the Democrats. </p>
<p>In both fights, Walker has no doubt that his most formidable opposition will come from Oregon's labor unions — despite a well-publicized rift in which two of the country's largest unions bolted from the AFL-CIO to form their own labor coalition. </p>
<p>"I wouldn't erect any tombstones to the union movement in Oregon," Walker says. "There might be a leadership struggle going on there, but when it comes to the real work of politics, nothing is going to change." </p>
<p>Oregon's unions have been a strong political force for years, helping to elect Democrats to the state's top political offices while working to win passage of ballot measures such as a minimum wage increase in the 2002 election. </p>
<p>Observers and top union officials said that despite this past week's upheaval at the AFL-CIO convention in Chicago, Oregon's unions would continue to work together as a unified political front in the coming election cycle. </p>
<p>Political analyst Jim Moore said the unions banded together more than a decade ago, mainly to fend off various anti-union and tax cut measures promoted by Bill Sizemore, who was Oregon's leading anti-tax advocate until he was sidelined by union-filed lawsuits. </p>
<p>"One of the legacies of Bill Sizemore's anti-union measures is that the unions now will pull together against their common political foes," said Moore, who teaches political science at Pacific University in Forest Grove. </p>
<p>In fact, top union officials said they likely would band together next year to fight the measure now being promoted by Walker's group that would restrict the ability of unions to tap their members' paychecks for political contributions. </p>
<p>Similar to measures sponsored by Sizemore in past years, Walker's plan would prohibit paycheck deductions for political purposes without the annual written authorization of each union member. </p>
<p>Union officials say Walker is trying to cripple organized labor by curbing unions' ability to collect money from their members. </p>
<p>"It's a way of silencing workers' voices in the political process," said Leslie Frane, executive director of the main Oregon chapter of the Service Employees International Union, one of the unions that decided to bolt the AFL-CIO this week. </p>
<p>Despite that high-profile divorce, however, Frane said SEIU would continue to work with the AFL-CIO in Oregon to boost candidates and oppose anti-union ballot measures in next year's election. </p>
<p>"The relationships are still there, and our common interests are still aligned," she said in an interview. </p>
<p>A similar view comes from Tim Nesbitt, president of the Oregon AFL-CIO, who said unions have scored many political successes in recent years by coordinating their election year efforts. </p>
<p>Unions helped deliver Oregon to Democrat John Kerry in last year's presidential election, he said, and they were instrumental in helping Democrat Ted Kulongoski win the 2002 governor's race over Republican Kevin Mannix. </p>
<p>"We've learned that we can accomplish a lot with a unified effort," Nesbitt said. "I would expect that AFL-CIO unions and non-AFL-CIO unions will work togher in a common campaign structure in 2006." </p>
<p>Lisa Grove, a Democratic pollster and consultant who is working for Kulongoski's re-election campaign, predicts the unions will pull together and make a major effort to defeat the Republican gubernatorial candidate next year. The GOP race is expected to feature a rematch between Mannix and Ron Saxton. </p>
<p>Grove said unions are especially ready to take on Saxton because of recent comments he made in a magazine interview in which he suggested firing public employees and then rehiring them with different benefits as a way to lower the cost of the public employee pension system. </p>
<p>"Saxton has made incendiary comments that don't set well with union households," she said</p>

<p>WASHINGTON -- Privatization foes in the Social Security debate have tried to pressure members of Congress by following them in waffle and duck costumes. Now supporters of private investment accounts are preparing a Capitol Hill snow job.</p>
<p>Dozens of college students who support the accounts plan to spend Wednesday afternoon lobbying members of the Senate Finance Committee -- after a news conference staged amid imported snow and ice sculptures in the summer haze hanging over the capital. </p>
<p>"The imagery has multiple meanings," said Jonathan Swanson, a Yale University senior who co-founded Students for Saving Social Security. "It can mean, `Our future melting away,' or, `Congress is giving us the cold shoulder,' or, `Congress is freezing us out of the debate,' or anything else catchy you can think of."</p>
<p>Swanson, a 22-year-old from Plymouth, Minn., and a friend, Patrick Wetherille, also 22, a senior at Haverford College, started the group in March amid complaints that young people were largely absent from the Social Security debate despite having a huge stake in the outcome.</p>
<p>Most of the proposed overhauls would affect people younger than 55, with little impact on those older than that. President Bush has cast his signature proposal -- diverting a portion of payroll taxes to personal investment accounts -- as most beneficial to young people, saying money deposited in the accounts will grow faster through the long-term effects of compounding interest.</p>
<p>Democrats have steadfastly opposed personal accounts, saying the tax diversion is a backdoor attempt to dismantle the Depression-era program by replacing its guaranteed government check with investments subject to a cyclical stock market.</p>
<p>The Democrats have been supported by Americans United to Protect Social Security. Its members spent the July 4 recess following undecided members of the House Ways and Means Committee in their districts in waffle costumes or, in one case, a duck suit.</p>
<p>Republicans on the Senate Finance Committee are slated to review potential overhaul options on Thursday. In the House, Ways and Means Committee Chairman Bill Thomas, R-Calif., aims to have his panel pass a comprehensive retirement security package -- including Social Security changes -- before Congress takes its summer recess at the end of the month.</p>
<p>"It's partisan here in D.C., but people support private accounts out in the country, even kids who hate Bush," Swanson said in an interview. Joining him were Ursula Williams, 27, of Long Beach, Calif., who quit her job with a public affairs company to join the group, and Ben Ferguson, a 23-year-old radio show host and senior at the University of Mississippi.</p>
<p>They are part of a core group of a dozen who have organized chapters on about 150 college campuses. The group has received office space and technical support from the Coalition for the Modernization and Protection of America's Social Security and the Club for Growth, two pro-account lobbying groups.</p>
<p>"The government is spending our money," Swanson said, decrying the congressional practice of borrowing and spending surplus Social Security taxes for other government programs. "We don't want a handout. Just give us our money."</p>
<p>On the Net:</p>
<p>Students for Saving Social Security: http://www.secureourfuture.org/</p>
<p>Social Security Administration: http://www.socialsecurity.gov</p>

<p>(06-07) 14:45 PDT WASHINGTON, (AP) --</p>
<p>It was a long day's work for Bono, lead singer for the rock band U2 and dedicated lobbyist for the world's poor and AIDS-stricken.</p>
<p>In Boston's FleetCenter on a Tuesday night, Bono and his band — Larry Mullen, Adam Clayton and the Edge — performed for a sold-out crowd, part of their 10-month, multicity tour of Europe and North America. Bono then rushed to the airport, arrived in Washington at 2 a.m. and five hours later set off on a busy schedule, his ubiquitous wraparound shades firmly in place.</p>
<p>The musician joined Secretary of State Condoleezza Rice for a State Department lunch and talks about the upcoming meeting of industrialized nations, aid to Africa and the prospects for the foreign operations spending bill.</p>
<p>Next stop was Capitol Hill where Bono pressed several lawmakers, including Senate Appropriations Committee Chairman Thad Cochran, R-Miss., about increasing assistance for the poor. Bono was back in Boston for two more sold-out shows Thursday and Saturday.</p>
<p>If there is a familiar image of Bono, it is this. The Irish-born singer crisscrossing the stage, microphone in hand, as he leads a band that has enjoyed critical and commercial success for nearly three decades. The numbers are impressive even by rock stardom standards: some dozen albums, more than 120 million copies sold worldwide, 14 Grammy awards and sold-out concerts from Berlin to Philadelphia.</p>
<p>In Washington, Bono is more than a musician who, with his band, was recently inducted into the Rock and Roll Hall of Fame. Since 1999, he has been a persistent and often-successful lobbyist, persuading Republicans and Democrats, presidents and lawmakers, to provide millions to help end the scourge of AIDS, eliminate poverty in Africa and forgive Third World debt.</p>
<p>Bono's celebrity has opened the doors to the Oval Office and Capitol Hill suites. His knowledge of issues and his dedication have won over the Washington elite, some of whom found their 15-minute, meet-and-greet sessions turning into hourlong policy talks.</p>
<p>"He is a man of depth and a great heart, who cares deeply about the impoverished folks on the continent of Africa. And I admire his leadership on the issue," President Bush said at a news conference with British Prime Minister Tony Blair on African aid and other issues.</p>
<p>"I told him he's my favorite pest. He keeps coming back," said Senate Minority Whip Dick Durbin, D-Ill. "It's not unusual for members of Congress to be lobbied by stars and starlets. Usually it's a one-time stand. He's different. He clearly cares. He's clearly committed."</p>
<p>Said former House Majority Leader Dick Armey, R-Texas: "I don't assume that a rock star is going to be lucid on the esoterics of economics." He gave Bono an "A-plus" for being well-informed and intensely devoted to the issues.</p>
<p>Celebrities often make a splash in Washington, whether it's testifying on Capitol Hill on a headline-grabbing issue or posing with the president as Elvis did with Richard M. Nixon. Inaugurals, major presidential speeches and media fetes attract the glitterati and sports stars. A former actor named Ronald Reagan became president and his Hollywood pals made the capital a destination.</p>
<p>But Bono has displayed staying power. He pounds the hallways of Congress, meeting with lawmakers when he can. He calls Washington officials during breaks in recording sessions. He traveled to Africa with Treasury Secretary Paul O'Neill in 2002 to draw attention to the plight of the continent's citizens. He enlisted the help of conservative Republican Jesse Helms, even though many in his music circle were aghast.</p>
<p>He's a rock star who can belt out U2 hits tinged with politics and religion, songs such as "Sunday Bloody Sunday" and "Pride (In the Name of Love)," to packed arenas. He also can tell the difference between an authorization bill and an appropriations measure. The former determines how much money will be spent; the latter provides the dollars.</p>
<p>"He's transcended music," said former Rep. John Kasich, R-Ohio, who met Bono through Arnold Schwarzenegger and later introduced the musician to Helms and Sen. Rick Santorum, R-Pa. "He's gone from a rock band to a rock band with a purpose."</p>
<p>Said Santorum: "He knows the importance of 302b allocations," the arcane congressional terminology that refers to amount of money the appropriations committee doles out to each department and agency.</p>
<p>Through his involvement, Bono has set a standard for social activism that others may follow.</p>
<p>"Brad Pitt is studying closely how Bono works ... as is George Clooney," said Jamie Drummond, executive director of DATA.</p>
<p>DATA — Debt, AIDS, Trade in Africa — is a nonprofit group Bono founded in 2002 with Bobby Shriver, the Kennedy nephew and Schwarzenegger brother-in-law who helped the musician navigate Washington, and various activists to increase awareness of the crises in Africa. The recently announced Live 8 concerts and the One campaign that has brought together the likes of P. Diddy, Pat Robertson and Cameron Diaz to fight poverty is the result of what Drummond calls "leveraging the global entertainment industry."</p>
<p>When Bono lobbies in the capital, there are few of the trappings of fame. No limousines, no entourage. When he met with Rice for lunch, each had one assistant.</p>
<p>But occasionally the rock star persona breaks through. In 2002, in a Rose Garden ceremony in which President Bush announced a $5 billion, three-year foreign aid package, Bono flashed the peace sign at the press corps. In a 2005 book titled, "Bono, in conversation with Michka Assayas," the singer recalled Bush's reaction.</p>
<p>"The peace sign was pretty funny. He thought so too," Bono said. "Keeping his face straight, he whispered under his breath, 'There goes a front page somewhere: Irish rock star with the Toxic Texan.'"</p>
<p>When Bono meets with lawmakers on Capitol Hill, and word of his presence spreads, fans line up with copies of CDs and albums to be autographed. At one meeting with Durbin, the senator was amazed at "how many members of my staff had a newfound interest in the Global AIDS initiative."</p>
<p>Bono, born Paul David Hewson 45 years ago, began his crusade in 1997 when he was asked to help out on the Jubilee 2000 campaign for complete cancellation of the debt Third World nations owed to richer countries. Greater involvement convinced Bono that he was "way out of my depth," and a tutorial with then-Harvard professor Jeffrey Sachs soon followed.</p>
<p>In 2000, Bono lobbied to get $115 million for debt relief in the foreign operations bill. A year later, there was $435 million. More lobbying resulted in the AIDS initiative of $15 billion over five years and double the U.S. assistance for Africa.</p>
<p>"He's almost a statesman rather than a celebrity," said Shriver, a Santa Monica city councilman who remains on the board at DATA. "The young man's Nelson Mandela."</p>
<p>___
</p>

<p>A Republican-led tax swap effort is being criticized from both sides of the aisle, while House and Senate negotiators show little progress toward a compromise on their plans to lower property taxes and increase state education spending.</p>
<p>With 10 days left in the legislative session, negotiations appeared stalled Saturday on the plan to replace reduced school property taxes with a menu of new tax hikes, including increased sales, cigarette and alcohol levies.</p>
<p>"We should get this concluded with a short amount of time once (the House has) answered their own questions," said Republican Lt. Gov. David Dewhurst, who presides over the Senate. "This is a matter that can be resolved in hours once they're prepared and ready to negotiate."</p>
<p>The House has been awaiting a fiscal analysis of an alternate proposal, submitted to the comptroller's office after their first attempt did not generate enough money.</p>
<p>The session ends May 30, and negotiators would need to reach a compromise even sooner to meet various legislative deadlines.</p>
<p>Lawmakers are under pressure to overhaul school funding after a state judge ruled the system unconstitutional and ordered an October closure of schools if problems weren't fixed. Attorneys for the state appealed the ruling to the Texas Supreme Court, which will hear oral arguments July 6.</p>
<p>The cornerstone of the tax plan is a restructured business tax, which would close loopholes that now allow an estimated five in six Texas businesses to avoid paying state taxes. Writers of the tax plan say it's time for Texas businesses to pay a fair, broad-based rate and stop evading state taxes.</p>
<p>Both the House and Senate measures offer businesses an option but include some form of a tax on wages. Critics, including former U.S. House Majority Leader Dick Armey, call the proposals a disguised income tax, which is illegal in Texas.</p>
<p>"The taxpayers elected the governor and gave the Republicans control of the legislature for the first time in 100 years because they pledged to control government spending and maintain our pro-growth tax system," said Armey, a Republican. "Gov. Perry and pro-growth members of the legislature should keep that pledge and stop the wage tax in its tracks."</p>
<p>Texas is one of nine states that doesn't have a state income tax, a perk businesses like.</p>
<p>"States that don't have an income tax in the last 10 years have had twice the job growth than the states that do have an income tax," said Brooke Rollins, president of the conservative think tank Texas Public Policy Foundation.</p>
<p>"The bottom line is a payroll tax is a tax on jobs, therefore you're going to have less of them," Rollins said. She said the Senate plan could cost Texas as many as 40,000 jobs.</p>
<p>Those fears are unfounded, Dewhurst said, maintaining that the tax on payroll is not an income tax.</p>
<p>"They're misinformed. The facts are just the opposite," he said, noting an analysis by the comptroller finding that the plan would create 60,000 jobs in the first five years, increase business' investment in Texas and increase disposable income.</p>
<p>Most lawmakers want to cut school property taxes by a third — from the current cap of $1.50 per $100 property value, to $1. For every penny of tax relief lawmakers give, they'll have to find about $110 million to replace it, most of it through the restructured business tax.</p>
<p>That would leave the state with a $5.5 billion hole to plug, before accounting for new spending in the classroom. The Senate plan would offer more conservative property tax relief over the next biennium.</p>
<p>"Tax increases will not help the school system, they will not help businesses, and they will not help the state," said Grover Norquist, a national anti-tax advocate and president of Americans for Tax Reform. "What they will do is increase the overall cost of living, while lowering the standard of living in Texas, hurting numerous families and businesses."</p>
<p>Rollins said the most economically efficient taxes are end-use consumer taxes, such as the sales, alcohol and cigarette levies. But Democrats have lambasted those proposals as an effort to balance tax cuts for the wealthy on the backs of the poor.</p>
<p>"It's an interesting rule that we're following these days and the rule is that those who have more pay less, and those who have less pay more," said Rep. Pete Gallego, an Alpine Democrat.</p>
<p>Charles Soechting, chairman of the Texas Democratic Party said the GOP proposals will hurt small business owners in Texas.</p>
<p>"These small business owners are going to be hard pressed to lay their hands on the tax relief Republican politicians are going to try to claim they delivered," Soechting said.</p>
<p>"It is one thing to advocate for less government or even for more government, but when Texans look at the Republicans in charge, what they long for most is better government."
</p>

<p>WASHINGTON - A presidential commission looking into how to make income taxes fairer and simpler heard pitches Wednesday from experts with ideas about revamping or replacing the current system.</p>
<p>The commission examined plans to base taxes on spending rather than income, which could mean a national sales tax or a European-style value-added tax.</p>
<p>As for transforming the income tax, the commission heard proposals for comprehensive change and minor tinkering.</p>
<p>"Not one person who we encountered as we traveled the country told us that our current tax system was good for America and that we should leave it alone," said the commission's chairman, former GOP. Sen. Connie Mack of Florida.</p>
<p>After hearing complaints about tax laws, the President's Advisory Panel on Federal Tax Reform used this meeting to consider ways to replace the system.</p>
<p>Michael Graetz, a Yale Law School professor, offered an outline of how to meld income taxes with a value-added tax. That tax, used widely in Europe, imposes a levy on the increased value of a product at each stage of production.</p>
<p>Under his plan, consumers would see a 13 percent to 14 percent value-added tax appear on their purchases.</p>
<p>Individuals earning less than $50,000 and families making under $100,000 no longer would pay income taxes under such a plan. Those still paying income taxes would get a simplified system and a top tax rate of 25 percent.</p>
<p>"I am very skeptical that you can fix the income tax," Graetz said.</p>
<p>Federal Reserve Chairman Alan Greenspan has told the commission that he supports some combination of income and consumption taxes as a catalyst for economic growth. Others have warned about the dangers of a poorly designed hybrid.</p>
<p>A consumption tax could take the form of a national retail sales tax, a potential replacement for income, estate and payroll taxes. Americans for Fair Taxation offered a plan setting a 23 percent sales tax on purchases, with exemptions for the poor.</p>
<p>An alternate plan, offered by David Burton of the Free Enterprise Fund, would reduce the rate to 8.4 percent for individuals by also levying the tax on businesses.</p>
<p>In the event the current income tax was retained, experts made the case for ways to promote savings and to simplify credits and deductions.</p>
<p>That could mean letting businesses immediately expense their investments and expanding individuals' ability to save money tax free.</p>
<p>"Why go searching for some new, magic elixir with unknown results?" said Ernest Christian, director of the Center for Strategic Tax Reform. He said the value-added tax was an "exotic import" at odds with the U.S. tax experience.</p>
<p>Others endorsed keeping the incentives for homeownership and charitable giving that President Bush wants preserved, while reducing the many other deductions and credits now available.</p>
<p>The commission, which expects to make final recommendations this summer, discussed options for a flat tax that eliminates deductions and credits, reduces income tax rates and erases taxes on investment income.</p>
<p>"There's not a human being alive today who knows what's in the code," said Steve Forbes, a one-time presidential contender who favors the flat tax.</p>
<p>Commission members asked about how the country could shift to such a tax, wanting to make sure the government got the revenue it needed during that transition.</p>
<p>Former Sen. John Breaux, D-La., the commission's vice chairman, asked whether people could accept a system that taxes wages but not investment income. Others raised questions about eliminating the current system's progressive tax rates.</p>
<p>Former Rep. Dick Armey, R-Texas, said it is a "big job" to convince voters that the poor and wealthy could benefit from a flat tax.</p>
<p>"What's fair is to treat everybody exactly the same as everybody else," he said.</p>
<p>ON THE NET</p>
<p>President's Advisory Panel on Federal Tax Reform: www.taxreformpanel.gov
</p>

<p>State officials say it might cost less than expected to fix hundreds of cracked bridges in Oregon and that the $2.5 billion highway upgrade approved two years ago needs another look.</p>
<p>Some want to use any extra money for unfunded congestion relief projects such as the Sunrise Corridor in Clackamas County and a Newberg-Dundee bypass.</p>
<p>The project's $1.3 billion bridge-fixing centerpiece has created 1,400 jobs, nowhere near the 4,800 a year backers promised for the overall project.</p>
<p>Lawmakers raised drivers' fees and taxes in 2003 to shore up a crumbling highway system. The plan was sold to the public as a way to put thousands of Oregonians to work.</p>
<p>The project was designed to fix 365 cracked bridges that, if left unaddressed, officials said would cost more than $123 billion in lost revenue over the next two decades. It also set aside money to maintain and expand other roads.</p>
<p>State transportation officials acknowledge they are months behind in repairing bridges.</p>
<p>They blame the delay on new research by Oregon State University that found the cracked concrete bridges are stronger than previously thought. That has forced the department to re-evaluate the number of bridges needing repair, pushing the schedule back, they said.</p>
<p>"It is a little bit slower, but we did have to intentionally hold back a bit until we got the OSU study," said Pat Cooney, the department's chief spokesman, who said the goal of 4,800 jobs a year over 10 years still could be reached.</p>
<p>Oregon Bridge Delivery Partners, hired to administer the project, has completed two bridges at a cost of $3 million and started on 35 bridges estimated to cost $69 million, mostly on U.S. 20, U.S. 26 and U.S. 97.</p>
<p>The next stage will address bridges on I-5 and I-84.</p>
<p>The department's reassessment shows it could cost taxpayers at least $100 million less to fix the 365 spans, although engineers still must evaluate 90 bridges. The number of bridges needing replacement has declined from 279 to 192, and 76 that were designated for repair now require no work.</p>
<p>At least one critic complained that transportation officials and elected leaders failed to properly assess the bridges.</p>
<p>"This is the kind of stuff that continues to build mistrust between taxpayers and lawmakers," said Russ Walker, director of Oregon FreedomWorks.</p>
<p>"There has been a tendency by agencies to overproject and underdeliver, and I'm not being critical of ODOT per se," said Sen. Betsy Johnson, D-Scappoose, who is on the committee that approves the department's budget. But the highway project's slow start "will be something I anticipate drilling on a great deal."</p>
<p>Some lawmakers want savings set aside for work not fully covered by the original plan.</p>
<p>"The money's there," said Rep. Donna Nelson, R-McMinnville, who wants a temporary bypass near Newberg and Dundee. "I feel that to wait 15 more years or 20 years for a major bypass is insane. We need to do something now."</p>
<p>The bypass, estimated to cost $300 million, is one of seven "projects of statewide significance" approved but not financed by transportation commissioners.</p>
<p>Also on the list are improvements to Oregon 62 between Medford and White City and the Sunrise Corridor from I-205 to U.S. 26.
</p>

<p>Washington's rekindled economy will pump an unexpected $739 million into the state treasury, significantly easing lawmakers' efforts to bridge a huge budget gap, revenue forecasters said Thursday.</p>
<p>The good news, the largest quarterly increase ever, was called "the luck o' the Irish" on St. Patrick's Day by the House finance chairman.</p>
<p>It touched off an instant debate over whether tax hike should be off the table as lawmakers deal with a $1.5 billion spending gap.</p>
<p>Key Democratic legislators said a tax increase still looks unavoidable.</p>
<p>Democratic Gov. Christine Gregoire said she'll spend the weekend deciding on her new budget-and-revenue proposal, but insisted that the rosy forecast is no silver bullet.</p>
<p>Minority Republicans and conservative watchdog groups said the extra money should definitely mean no new taxes.</p>
<p>Anti-tax initiative sponsor Tim Eyman thundered, "They have been given more than 700 million good reasons not to raise taxes."</p>
<p>The new forecast from the state Revenue Forecast Council was unexpectedly robust. Most budget-watchers had expected an increase of between $200 million and $300 million.</p>
<p>But ChangMook Sohn, the state's chief economist and the council's director, forecast the unusually large increase — $301 million more in the fiscal year that ends June 30, plus an additional $438 million in the upcoming two-year budget cycle.</p>
<p>That will more than absorb a $518 million revenue loss from two recent state Supreme Court decisions, including elimination of the state estate tax. That revenue loss was part of the previously calculated $2.2 billion budget gap.</p>
<p>Once the $739 million in new revenue was subtracted, the problem shrank to about $1.5 billion.</p>
<p>Victor Moore, the state budget director, said that number includes unavoidable cost increases to provide basic services, plus discretionary increases such as pay raises for teachers and state employees, class-size reduction, and about 7,000 more higher education slots.</p>
<p>"This is very good news," Moore told reporters.</p>
<p>The council chairman, House Finance Chairman Jim McIntire, D-Seattle, called it "a wee bit o' Irish luck."</p>
<p>But he and Senate budget Chairwoman Margarita Prentice, D-Renton, said the good news isn't enough to stave off a revenue increase as lawmakers write a $26 billion budget for the next two years. Both spending cuts and revenue increases will be necessary, they said.</p>
<p>"This is definitely good news, but we still have a very big budget shortfall to deal with," said Sen. Mark Doumit, D-Cathlamet.</p>
<p>Republicans, though, said it's more clear than ever that the budget can be balanced without new taxes. Sen. Joe Zarelli, R-Ridgefield, ranking Republican on Prentice's committee, said the Republicans and then-Gov. Gary Locke solved a deeper budget problem two years ago without extra taxes.</p>
<p>"We can certainly do it again," Zarelli said.</p>
<p>Evergreen Freedom Foundation, a conservative budget watchdog group, and the anti-tax FreedomWorks organization both noted that the upcoming budget cycle will have $1.7 billion more revenue than the current biennium.</p>
<p>"This projection should send a strong message to the governor and the Legislature that they need to stay the course and let our economy continue to recover," said Jamie Daniels, director of the state FreedomWorks chapter.</p>
<p>Gregoire welcomed the revenue news, but said the state still has a grave budget problem.</p>
<p>"Needless to say, I am really pleased with today's quarterly revenue forecast," she told a news conference. "Most importantly, it shows that our economy is gaining traction, that people are getting back to work and that business is increasing.</p>
<p>"But make no mistake, the new forecast is not a silver-bullet solution to our budget problem."</p>
<p>She said the extra revenue will mostly be absorbed by the impact of the two Supreme Court rulings plus the $100 million in higher caseloads, school enrollment and other costs.</p>
<p>The new projection does mean, she said, that "Draconian cuts" won't be necessary. She didn't elaborate, but previously her office had talked about cutting thousands from state-subsidized health coverage and freezing college enrollment.</p>
<p>Sohn said the state's economic recovery is outpacing the nation's, with 64,000 jobs added in the last 12 months, including 3,800 good-paying Boeing jobs. The state's "red-hot housing market" shows surprising strength, generating "just unheard of" real-estate taxes for the state, $1.3 billion in the last two years alone, he said.</p>
<p>But he cautioned that lawmakers shouldn't just presume the steady expansion will continue.</p>
<p>"We have worries," he said, including soaring oil prices, the possibility that rising mortgage rates will cool off the housing market, the declining dollar, and geopolitical risks, including the Iraq, terrorism, and tense conditions in the Middle East.
</p>

<p>MONTPELIER, Vt. FreedomWorks, a national group that advocates less government, lower taxes and more freedom is opening a Vermont chapter.<br />
The national group was formed last year by former House Majority Leader Dick Armey and former vice presidential nominee Jack Kemp.</p>
<p>The state director will be Robert Roper, who handled media relations for the U-S Senate campaign of Republican Jack McMullen last year.</p>
<p>Roper says the 2004 election brought a strong liberal takeover of the House, and increased the liberal majority in the Senate.</p>
<p>He says Vermont FreedomWorks will be an organized resistance to liberal organizations that he says are working hard for big government, high tax schemes, and more restrictions on opportunity and growth.</p>
<p>Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
</p>