Governor urges state to ”get out of the mud”

OLYMPIA – Gov. Christine Gregoire, urging Washington to “get out of the mud” and aspire to greatness, on Tuesday signed a tax package and a $26 billion two-year state budget that invests heavily in education and health care.

The tax package includes a $6-a-carton increase in cigarette taxes and higher taxes on hard liquor, but an unapologetic Gregoire said the taxes won’t hurt the average citizen much and will produce a better state.

The budget and tax package has been roundly criticized by fiscal conservatives and Gregoire’s signing came just days before a Chelan County court hears arguments in a case that could toss out her election.

But the rookie Democratic governor defended both the budget, which increases spending by 12 percent over current levels, and the revenue package, the first major tax hikes in 12 years.

The budget plan, which leaves a reserve of about $170 million, requires a new revenue package of about $480 million, including the “sin tax” increases on cigarettes and liquor.

Smokes will go up by 60 cents a pack in July and the liquor tax will rise by $1.33 a liter. The estate tax, called the death tax by foes, will be imposed on about 250 large estates each year. Extended warranty contracts on consumer goods like computers and TVs will be taxed.

Gregoire told reporters the revenue package meets her test of not including general taxes – such as the sales, property and business taxes. Without the extra revenue, the state couldn’t provide 8,000 additional higher education enrollment slots, restart two expensive voter-approved education initiatives, or expand access to health care, she said.

In a slap at her Republican gubernatorial rival, former Senate budget Chairman Dino Rossi, she said she inherited an unsustainable budget, one that didn’t properly fund the initiatives, salaries for public employees or the pension system. The new version, crafted by Democrats in both houses from a template she suggested, does much better, she insisted.

As for criticism from Rossi and others that the state needed a no-new-tax budget, she said heatedly, “We can stay stuck in the mud, we can be a second-rate state. But you know what? I love my state. That’s not good enough for us.

“We’ve got to get up. We’ve got to get going. We’ve got to leave a legacy to our children. We’ve got to be at the forefront. We should be second to no one when it comes to education ….

“I say it’s time to invest in education, to invest in transportation and our economic vitality.”

A day earlier, Gregoire approved a $3.3 billion construction budget. It relies heavily on borrowed money, but doesn’t boost taxes.

The governor signed a transportation package last week. The 16-year plan includes $8.5 billion in new revenue, including a 9.5-cent-a-gallon gas tax hike phased in over the next four years. An initiative has been filed to overturn the gas tax increase.

The two-year operating budget cleared the Legislature by partyline votes over the objections of Republicans who argued new taxes weren’t necessary.