OLYMPIA –Washington should reform its employees' pension systems now and other spending rules down the road to avoid annual problems with budgets that don't balance, Attorney General Rob McKenna, the likely Republican candidate for governor, said Monday.

As the Legislature entered the third week of a special session without a budget agreement, McKenna took several swipes at Democratic leaders, particularly House Speaker Frank Chopp: “What is holding this up is the speaker's refusal to allow votes on the reform bills,” McKenna said.

He later accused Chopp and Senate Majority Leader Lisa Brown of Spokane of “not supporting reforms.”

But Chopp and Brown fired back, saying a new budget proposal will be unveiled later this week. Other bills tied to that budget, including some of the reform topics McKenna mentioned, are set for hearings on Wednesday.

“We’re going to come in and try to pass the budget,” Brown said in an interview with The Spokesman-Review. “The speaker has not derailed the process at all.”. . .

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Whether the latest budget proposal, has the votes needed to pass both chambers won’t be known until Wednesday, when rank-and-file members will return to Olympia for briefings on the proposal, she said.

Democrats hold a majority in both houses, but in the Senate, three Democrats broke with their party last month and supported a budget written by Republicans. That coalition may have to grow by at least one Democrat to hold sway over any new spending plan, however. Senate Minority Leader Mike Hewitt of Walla Walla had surgery Monday to remove a tumor from his thymus, an organ in the chest.

Rebecca Japhet, his spokeswoman, said the surgery went well, and his prognosis is good. But it’s not known when he will return.

At a press conference in front of a partially empty government building he said typifies problems with the way the state handles long-term projects, McKenna listed a series of principles he'd emphasize if elected in November. They included expanded competition for state services from businesses and non-profit organizations, the use of “performance pay” to reward state employees, a greater role for the Legislature in negotiating labor contracts with state workers and reforms to the various health care plans to cut costs and expand consumer choices.

But two reforms should be tackled right now, he said. One is legislation requiring the state to match expenditures to projected revenues for four years, rather than the current two. The other is a series of pension reforms that he said could save the system more than $2 billion over 20 years.

The pension reforms were part of budgets crafted by Senate Republicans. Part of their plans, however, also called for the state to skip a pension payment this biennium, to leave more money the General Fund for programs. Skipping the payment now meant less savings from the reforms over the long-run, Democrats said.

Asked if he supported skipping the payment, McKenna contended it was something Republicans proposed go give Democrats more money to spend in the budget: “They're saying they're happy to back off.”
Brown said some of the pension reforms Republicans proposed might actually cost money, according to actuarial projections. Democrats offered to negotiate another proposal, involving an end to early retirements provisions, but Republican budget writers “never accepted the negotiations”, she said. The Legislature has passed a series of reforms to help the budget in the last several years, she added.

McKenna said he wasn't involved in budget talks “other than checking in” from time to time with some legislators: “I'm not trying to be a budget writer.”

Asked if he thought his campaign press conference on budget priorities would derail ongoing budget negotiations, McKenna replied: “It's highly unlikely. The speaker has managed to derail this himself.”
Chopp fired back in a prepared statement that McKenna “doesn't know what he's talking about.” House Democrats are negotiating with Republicans and the Senate in good faith throughout the process, he insisted.

“If McKenna were actually part of the solution being worked on, he'd have known that a number of the reform bills he refers to were already introduced by House Democrats this morning and are scheduled for a public hearing on Wednesday, " Chopp said.

Gov. Chris Gregoire also disagreed with McKenna's characterization of Chopp, spokeswoman Karina Shagren said: “He is at the table and negotiating in good faith.”

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