Gregoire shows fiscal sensibility

Another year, another stopgap budget.

Washington Gov. Christine Gregoire’s $25.8 billion, two-year blueprint has critics on both sides of the aisle complaining, which might be the best indication that it is a balanced approach.

None of the major taxes (sales, business and property) would increase, which will help the state continue its economic recovery. Higher education gets an overdue infusion, which will make colleges more accessible. Teachers receive the cost-of-living raises that have been delayed since a citizen-passed initiative was put on hold. The smaller-class-size initiative also would resume.

Gregoire also replaces Medicaid funding that the federal government took away and gives the mental health care system a desperately needed cash infusion.

But her proposal is not just larded with add-ons. She wants to eliminate 1,000 middle-management government jobs, which is entirely defensible since those ranks have swelled by 42 percent since 1998. She also wants to tackle health care costs, although she is sketchy on the details.

For sure, the budget contains some of the funding and accounting gimmicks that have become routine over the past few years. The cigarette tax is bumped up 20 cents a pack, payments to the state’s pension are delayed and reserves are tapped.

The state’s budget structure remains teetering on a precipice, but Gregoire is not oblivious to the peril. She partially restored the estate tax, which is one of the state’s rare progressive levies, and she’s even acknowledged that Olympia needs to take a serious look at the Gates Commission report on taxation. Yes, that’s the study that calls for an income tax and notes, quite correctly, that the state’s tax structure hasn’t kept up with the changing economy.

Critics on the left say they’re disappointed that Gregoire didn’t call for more tax increases, but the main options are a bump in the regressive sales tax or the commerce-killing business and occupation tax. Critics on the right say no taxes should be increased, but that’s unrealistic given the $1.5 billion revenue shortfall and the rapid rise in health care costs.

However, the governor should give more urgent attention to containing health care costs. For one thing, she should urge that labor contracts be reopened with the goal of transferring more insurance costs from taxpayers to workers. State employees are charged about half of what equivalent private-sector workers pay for health care premiums. High employee costs force the state to cut back on services for constituents with far greater needs.

Gregoire’s first budget is neither dramatic nor bold. But it is sensible, and it bides time for state leaders to come up with long-term budget solutions.