Locke's budget offers early look at Legislature's toughest fight

It may seem like “same song, different verse.”

Washington’s new governor — whomever that is — and a newly elected Legislature will have to deal with a yawning budget chasm when they open for business in just three weeks.

Hey, haven’t we seen this movie before?

It’s true that dealing with a billion-dollar budget hole is getting to be old hat, but it has roared back again in a new and troubling incarnation. This time the size of the spending gap is an eye-popping $1.8 billion, and the easy trims already have been made.

Then, too, the politically volatile question of tax increases is back on the table for the first time in 12 years.

And the political chemistry is different this time, potentially pitting a tightfisted Republican governor against a more expansive Democratic Legislature.

Outgoing Democratic Gov. Gary Locke started the ball rolling last week with his budget and package of “sin taxes” on booze and pop, with a tax on the doctors thrown in for good measure.

Now the fun starts.

“It takes your breath away,” says the Senate’s scrappy new budget chairwoman, Margarita Prentice, D-Seattle, referring to the daunting prospect of trying to find a politically acceptable brew that includes both spending cuts and tax hikes.

Locke’s swan song

After 22 years in the public eye, Locke exits for Seattle and the simple life in a few short weeks, but the budget blueprint he leaves behind will frame Olympia’s biggest, toughest debate of the winter.

The backstory is that Locke himself proposed and won a no-new-taxes budget two years ago, back when the gap was a monstrous $2.6 billion and the state was mired in recession and high unemployment. His partner in ramming that plan through the Legislature, over fellow Democrats’ violent objections, was none other than Republican Dino Rossi, then the Senate budget chairman, who’s currently clinging to a tiny lead in the hand recount of the governor’s election.

Fast forward to today, and you have Locke saying the new two-year budget simply can’t be handled the same way. His main point is that the “low-hanging fruit,” the supposedly easy stuff like freezing salaries and voter-approved education spending initiatives, can’t be taken again this year.

As Locke took his case to the Legislature and to newspaper editorial pages last week, he said the problem has ballooned to $1.8 billion again — essentially unmasking a structural problem of not enough revenue to support the basics that people expect.

The new gap includes money to restart the initiative spending, as lawmakers pledged, including teacher pay raises and grants for smaller class size; health care costs that are going through the roof; higher education needs that are escalating as the state girds for the boom in the college-age population; pay boosts negotiated under a new collective-bargaining law; and rising pension and bond debt.

Locke said the easy thing would have been for him to slink out of town, leaving behind only a bare-bones budget, balanced within existing revenue.

“As I prepare to leave office, I am very cautious about suggesting any tax increases,” he said. But he concluded that an all-cuts solution would unravel some key services and backtrack on things like K-12 and higher education that are vital to the long-term future of the state.

“We’ve got to keep investing in education and we can’t turn our backs on the less fortunate among us,” he said.

Locke presented two versions of his budget, one bleak and full of misery, the other more optimistic.

“This is not a scare tactic,” he said of the no-new-taxes version that lidded college enrollment and class-size money, cut people from health coverage, and so forth.

The enhanced budget restores the goodies, but carries the political land mine of taxes. Locke wants to raise more than a half-billion dollars by jacking up the tax on soda pop, beer, wine and liquor, and another $94 million from a new tax on doctors.

Kudos & lumps of coal

For the past two years, Locke had basked in the admiration of fiscal conservatives who loved his earlier stance on taxes and his reformist Priorities of Government system of ranking state services from the must-have essentials to the merely nice-to-have. His own Democrats were aghast at his supposed conversion to Grinchdom.

But after his new budget this week, the reaction reverted to more traditional fault lines. The Democratic leaders in both houses heaped praises on Locke’s budget priorities and his leadership on the tax front. If anything, the advocacy groups said, it’s too penny-pinching.

For Democrats, the enhancement budget provides some early cover. It puts the T-word on the table for the first time since a Democratic Legislature passed a billion-dollar revenue increase back in 1993 — and paid the price in the 1994 elections.

Republicans, now in the minority in both chambers, have lost their unlikely Democratic partner — and they were howling like banshees last week.

“We need to be straight with taxpayers — and this plan doesn’t cut it,” said the new House GOP leader, Bruce Chandler of Granger in the Yakima Valley. “There are too many one-time fixes in the governor’s proposal and this is not the appropriate time to add to anyone’s tax burden.”

Democrats must “start with a clean piece of paper,” he said.

Jamie Daniels, head of the anti-tax Washington FreedomWorks, and Tim Eyman, sponsor of tax-limit initiatives, said Locke has turned a deaf ear to voters’ landslide rejection of Initiative 884. That was the proposal for a penny increase in the sales tax, to raise $1 billion a year for education.

“Governor Locke continues to fail to understand that you can’t tax and spend your way to prosperity,” Daniels said. “The citizens just sent a strong message and elected officials need to listen.”

Eyman said Locke seems to be luring legislative Democrats to join him in retirement. A tax hike would be “a one-way ticket to electoral disaster,” he said.

Bob Williams, head of the conservative think tank Evergreen Freedom Foundation, said the only true shortage in Olympia is “self-discipline, common sense and accountability.”

Where from here?

First of all, the state needs a new governor before we know what the real dynamics will be.

Rossi has won the first two counts, but hundreds of ballots in Democratic-leaning King County remain to be counted, and Democrat Christine Gregoire could yet pull it out. There is talk of lingering court warfare, carrying the fight to the Legislature, or even a brand new election.

The outcome, of course, will have huge ramifications for the budget-and-tax question. Gregoire, working with like-minded colleagues in the Legislature, would look more kindly toward a Locke-style solution. She campaigned as a fiscal conservative, but hasn’t slammed the door on taxes. And she did make a lot of promises about improving K-12 and higher education and about protecting the most vulnerable citizens.

Rossi, meanwhile, has drawn a line in the sand about taxes, and seems to mean it. With a veto pen, he would have enormous clout for his point of view, but Democrats wouldn’t sit still for letting the executive branch write the budget.

David Ammons may be reached at P.O. Box 607, Olympia, WA 98507, or at dammons@ap.org.