Budget News Conference

March 21, 2005

Well, good morning.

Let me just say, it has been a pot full of work. But I am very excited about this budget because it does what I believe in. It makes sure that we�ve got good schools, it makes sure we�ve got health care for our children, and it makes sure that we invest in our economy for the future.

It tries to get us out of the rut that the national recession has put us in. In government sometimes there�s this feeling if you just hunker down that it�s okay to get by. The trouble is, the status quo will kill you. You might think you are holding your own but in fact you are backsliding. When you don�t move forward in education and health care and making your economy stronger, then you really do go backwards. And if we need the lesson, all we need to do is look to our sister state to the south.

I have produced a no-new-taxes budget. It is a budget that preserves the status quo. And it fills the gap that we have in our budget and I am here to tell you this morning in this administration getting by isn�t good enough. We are going to set high standards in everything we do in state government. We are going to blow past the bureaucracy. We are going to cut middle management. We�re going to cut programs that don�t work. And we are going to move our state forward, and we are going to do that not by just getting by, because getting by isn�t good enough for Washington State. So I have gone one more step and I am offering all of us a very clear choice. We can leave a legacy to our children based on Washington�s values: the promise of hope and opportunity, a better economy and a better future for Washington state.

If we truly value education and health care, it is time for us to stand up and defend those values right now, right here in this budget. I�ve got the details for all of you, but let me highlight just a couple of things. First let me talk about schools. There is no more important investment, in my opinion, than investing in our schools and so we�ve done so. We�ve had high expectations for our children; let�s make sure they can meet those expectations. And so, for the first time in history, I have taken the learning assistance money and dedicated it to grades 9-12 and I have asked for an emphasis on math. I have said 728 ought to be fully funded. The citizens of our state bought it, we just never funded it. So it is time for us to purchase it and I have done that as well.

If we invest in a lower class size, we can begin the idea of meeting the challenge that Bill Gates gave to the nation when he addressed us at the National Governors Association. We can begin the process of making sure that every child has a shot at a good education. We can begin the process of reducing one-third of our kids who are dropping out of high school today. We can make sure that we reduce youth violence in our schools.

I want to invest in early learning. Every child that enters the first grade who�s not ready to learn all too often doesn�t catch up, so lets invest in early learning. And it has been a decade, my friends, since we have invested in special education. It�s time that we invested in special education in our schools. I have dedicated $50 million to begin that process.

And lastly, but not least, our teachers deserve respect. Our citizens overwhelmingly said give them the pay raise they deserve, and so we have. We have fully funded Initiative 732. Every child should be given the chance to live up to whatever their dreams may be. My mom taught me that. My mom would be proud of my budget today. I�ve invested in our children. I�ve invested in the future of Washington State. I�ve said getting by isn�t good enough for our children.

Higher education today is a challenge. We�ve got a �no vacancy� sign up all to often. Our kids can�t go on to get the education they deserve. Yes, we have one of the highest BA degree numbers in the country, but they are imported out of state. How can we be satisfied when we�re 33rd in the country? We have one of the lowest enrollments in higher education. It�s not good enough. We can�t keep doing this. So I�ve increased the enrollment to 6,600, which is the projection over the next two years. I�ve invested in our community colleges and our four-year institutions. I have created two new four-year institutions, one in Tacoma and one in Vancouver. And yes, I have raised tuition. But I have raised it less than it has been in a number of years, 5%. But I have also said the state is going to pay its fair share to make sure there is financial aid so every child gets an opportunity.

And I have done one more thing that hasn�t been done in a number of years. I haven�t given with one hand and taken away with the other. I�ve given that tuition increase to our institutions of higher education. And I haven�t said they have to spend it on enrollments. I paid for them. I didn�t undercut them by reducing their general fund. I�ve said to them invest in quality, invest in your faculty, invest in making a better future for our higher education intuitions. If we don�t get going to allow our students the opportunity, then I fear what I said before is true. Getting by isn�t good enough.

I want to study the future for our state. Whether it�s pre-K, K-12 or higher ed. And there is a promise there, about how I want to see our state go. And that�s being number one in the country and we can do it working together.

Health care is the second area of concern to me � in particular in the area of children�s health care. You know earlier I tried to expand health care to some our children. Well, today we have expanded it to a total of 47,000 children in Washington State. That is a value I am ready to stand up and fight for. Secondly, we have made sure that those whose employers are not providing health care have the ability to go to the Basic Health Plan, 100,000 Washingtonians.

And yes, we�ve invested in our hospitals, which are struggling today mightily as they provide indigent care without adequate reimbursement. So I have gone with what the Hospital Association asked of me and raised about $50 million for our hospitals so they can continue to provide necessary care and not find themselves literally on the brink of bankruptcy.

I�ve invested in public health and I�ve made sure our community health clinics are there for those who need them. We also have to do something about the rising cost of health care. And so after this session, I�ve indicated to legislators this morning at breakfast, let us get about the business of ensuring we can contain the rising cost of health care in this state. If we do not, we will sacrifice education. We will sacrifice social services. I can�t do it in this budget, I can�t do it in this legislative session, but we are going to have to get our arms around this problem. Getting by isn�t good enough.

In the area of social services, I just want to touch on a couple of things. I feel passionate about protecting our children. When CPS gets a complaint that a child�s life is at stake, we need to respond timely. And that is 24 hours, not 10 days. So I have asked them to implement that now. Those complaints where a child�s life is at stake need to have a response within 24 hours. To those where the child�s life is not at stake, 3 days. But we must toss out the old criteria of 10 days. Our children deserve that.

Secondly, I want to invest in community mental health. You know there was an $80 million cut by Medicaid. I restored that. If I don�t restore that, these folks will be put at risk. We will be put at risk. They will be treated. They will be treated in our county jails. That�s not right. And thirdly, I have doubled the investment in drug and alcohol treatment. If we do that, we can ensure much better a lower recidivism rate of those who come out of our institutions and we can make sure those who need it can care for their children. This is a wise investment that will save dollars in the future. I believe people in desperate circumstances deserve the help of the State of Washington. I want us to respond quickly to any abuse complaints to a child. I want to make sure they are protected. It is not good enough to respond in 10 days.

Economic development is our future. I have been talking to employers over the last month who are considering coming to Washington state and every one of them tell me the number one criteria for them is what�s the qualify of education for their workforce in Washington State. So I am investing in that. I am investing in pre-K and K-12, and higher education. For those 25% of our 18-24-year-olds who do not have a high school diploma, I am investing $5 million to make sure they get one. I want us to deliver what is the best investment we can make in economic recovery and that is education.

My capital budget is an investment of 20,000 jobs, direct and indirect. And with the two bills that I�ve introduced in the Legislature � the technology transfer for our higher education research institutions and our Life Science Discovery Fund where we can revolutionize health care and agriculture � there�s a promise of 20,000 jobs. We have been fortunate with the economic engine that we�ve had in our state. But we need to look to the future. We need to seize opportunities. We need to make sure our state is a leader. Getting by isn�t good enough. Let�s us seize this opportunity with the Life Science Discovery Fund.

The capital budget is a $2.9 billion budget. It�s over $700 million in higher education, much of which, about $383 million, goes to our community and technical colleges. We�ve made sure that our K-12 system has fully funded their grants. And I have looked to make sure that our natural resources are protected and, in particular, that we restore our parks to where they should be so that our children have an opportunity to experience the wonderful quality of life we have in the state of Washington. And I have offered up community projects to $29 million to invest for their economic development and a long-term strategy that will help them.

Now by way of taxes, you have all reminded me time and time again that I promised no general tax increase. I�ve lived up to my commitment. There will be no general tax increase � no increase in sales tax, no increase in B&O tax and no increase in property tax. But I have looked at two sources of revenue that I want to enact. One is to partially restore the estate tax to about $130 million a biennium. I intend to raise the threshold of $900,000 to $2 million and I intend to exempt farms. If we do that, we can almost fully fund Initiative 728.

But at 3 a.m. on Friday morning, with the prospect that that was all I was going to do, I came into Victor Moore at OFM and said I wasn�t happy. Surely we can do better by education in the state of Washington. So I have increased the per-pack price of cigarettes 20 cents and I use that money to ensure that we will fully fund the class-size initiative, and that we fully fund enrollment in higher education. I think that�s the right thing to do for Washington State.

I want a dedicated funding in the out years; it may go to 80 cents a pack. If I can get a decline in smoking by raising the per-pack price, that�s good for Washington State, that�s good for our health and it will save money. In the meantime, I don�t think we ought to start every biennium by asking: are we going to fund 728 or not? Let�s get on with it. Let�s fund it. Let�s make sure our children get the opportunity of a quality education and we support our teachers.

All other state service is funded within existing revenue sources. We managed to do this by identifying $1.4 billion in savings and reductions. After last week�s revenue forecast, I thought we could just get by. But I didn�t fight for this job to just get by. I fought to leave a legacy. I fought to do what my mom said and that is invest in our children and their education. I decided we could do more for education. I decided that getting by isn�t good enough.

Thank you and with that I will take your questions.