Gregoire, Rossi differ on state's economic future

Gregoire, Rossi differ on state's economic future »Play Video
The Wall Street collapse and the housing market mess will mean more trouble for Washington state. Both candidates for governor say they now expect a budget deficit of $3 billion.

The sunshine at the state Capitol on Wednesday was just a mirage; there was no joy under the dome.

Gov. Chris Gregoire and her Republican challenger, Dino Rossi, predict a bad economic report card on Thursday.

"I'm expecting a worsening," said Gregoire. "I don't know how you could expect anything else after what we've seen happening to our financial institutions and now our insurance institutions, AIG, on Wall Street. So I think everything's got the entire country nervous."

"It's going to be, in the end, I think, the largest dollar deficit in state history," Rossi said. "It's not because of a downturn. There's going to be an 8-percent revenue growth, but she (Gregoire) outspent it by $2.7 billion."

Both guess, despite Boeing and Microsoft, the state faces a huge two-year deficit.

"My priorities are not raising taxes and protecting the most vulnerable -- the developmentally disabled, the people in nursing homes, the mentally ill and others," said Rossi.

"We put down all our priorities and we live within our means. And when we have no more money, we're done," Gregoire said.

Neither will be specific about cuts, but both say there will be no new taxes.

Rossi says don't worry, our state's economy has been good. There will be an 8-percent increase in revenue in the next two years, he says, and we can live with that.

"Education is not going to have a cut. They may get an increase when you've got 8-percent more revenue coming in," he said.

"I listen to my opponent wherever he goes, telling whatever group it's all going to be just fine. It reminds me of Santa Claus. He only comes to my house once. He apparently lives at Dino Rossi's house," Gregoire said.

The state does have $700 million in its rainy day fund. Rossi and Gregoire both say it's too early to talk about tapping that, but Gregoire says economically speaking, it is raining.

The new state revenue forecast is expected to be released on Thursday. Gregoire says the latest report will indicate a slight improvement. But, she adds, public confidence has been badly shaken and because of that, the long-range outlook is getting worse.

Watch the gubernatorial debate at 9 p.m. on Saturday, Sept. 20 live here on and on KOMO 4 TV.