Locke in spending mode: Colleges and high tech

OLYMPIA -- Gov. Gary Locke, still aglow from Boeing's decision to assemble the 7E7 in Washington, yesterday declared "the state is turning around" and urged lawmakers to invest millions in higher education and tax breaks for the high-tech industry.

Locke, shifting cautiously into the spending mode after chopping the budget during the now-ending recession, unveiled a $193 million supplemental state budget that would plow more cash into colleges, health care, prisons and other core state services.

The higher education push, which would add more than 5,000 enrollment slots and finance new campus buildings, is the top priority of Locke's Competitiveness Council. The governor formed the panel to entice Boeing and others to expand in Washington.

Locke also urged the Legislature to pass $74 million worth of tax incentives for high-tech research and development and to spur manufacturing in rural areas. The tax breaks are set to expire next year.

After spending much of his second term in a cutback mode, the governor was clearly happy to be proposing expansions. The new budget has no cuts or elimination of programs, but adds millions for "the programs people want most" and those designed to spur the economy.

Locke does suggest early release for about 500 non-violent prison inmates who are behind bars for drug offenses, and would reduce the number of low-risk inmates under post-release supervision by about 2,000. This is expected to save $18 million.

Locke uses federal dollars and a big chunk of the state's $544 million reserve fund to keep the budget in balance without new taxes. Under his plan, the surplus dwindles to $172 million, less than 1 percent of the state's overall $23 billion, two-year budget.

Locke indicated he thinks the state's budget crisis is over, but insisted that his "very thoughtful and orderly approach" to budgeting still shows fiscal discipline.

"The economy is turning around," he told a news conference. "Our state government is on solid footing and our transportation system is on the mend. And the Boeing decision to land the final assembly of the 7E7 in Everett is proof that Washington is a great place to do business.

"In short, we're in pretty good shape," particularly when compared with other states in the West.

Locke insisted that the state can -- and should -- afford the investments he outlined to help kick-start the economy.

Earlier this year, the Democrat teamed with legislative conservatives to pass a $23 billion budget that required spending cuts, salary freezes and suspending voter-approved spending initiatives.

Budget hawk Bob Williams, president of the Evergreen Freedom Foundation, a free-market think tank, said Locke deserved praised for his "Priorities of Government" approach to tough-nosed budgeting, but said the governor's latest effort reverts to the old ways of looser spending controls.

"We didn't see the fiscal discipline this time," he said in an interview. "He gives us a deficit of $450 million by spending that much more than he takes in this biennium. Next biennium, the deficit will be more than $1 billion."

Locke leaves far too skimpy a reserve fund, he said.

Other reaction to Locke's new budget rewrite was mixed.

"I was frankly pleasantly surprised, especially putting money toward high-demand enrollment," said William Marler, president of Washington State University's Board of Regents.

Of the 5,000 enrollments Locke's proposal calls for, roughly 3,000 would be in high-demand fields such as nursing, he said.

"Unfortunately," he added, "we still have the problem of the demographic bulge and adding 5,000 in 2003 doesn't solve that problem." WSU will still cap its transfer and freshmen enrollment, he said.

"I think is a good down payment," Marler said.

"The governor has focused on the right issues," said Lee Huntsman, president of the University of Washington. Of particular note, he said, is the proposal's call for a range of enrollments that include those in high-demand areas.

However, Huntsman added, "this is a fraction of the numbers that the (Higher Education Coordinating Board) and everyone else, including the governor, is saying we need to address the access demand. There's a great deal of work to do."

Health care advocates and the anti-poverty lobby praised Locke's proposal for lower premiums for kids' health care, but urged the Legislature to erase the monthly premiums altogether.

David Rolf of the Service Employees International Union praised Locke for endorsing a $47 million collective-bargaining agreement that would provide a 50-cents-an-hour wage increase for home health care workers who take care of state clients.

LOCKE'S PLAN

TOTAL: A net increase of $193 million, for a two-year budget total of $23.3 billion.

RESERVES: $172 million.

WINNERS: Higher education, health care, and tax exemptions for high-tech companies and for manufacturing in rural areas, home-care worker salaries, and prisons and construction projects.

TAXES: No general tax increases. Tax breaks are extended for high-tech industry and for manufacturers who build in rural areas.

NEXT: Republican Senate and Democratic House will take turns producing their own drafts this winter. Negotiators will resolve differences. New revenue forecast due in February.

DETAILS: Go online to the governor's budget office: www.ofm.wa.gov

P-I reporter Jake Ellison contributed to this report.

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