Watch full size video:

OLYMPIA — Gov. Christine Gregoire reported there’s something for “everybody not to like” in her proposed state budget, which would snap more than $3.5 billion in funding for public schools, social services and other areas to ameliorate close the biggest budget shortfall in state history.

She was quickly proved right.

As Gregoire unveiled her budget Thursday, lobbyists complained about cuts to programs that aid the poor. State workers and teachers unions complained about a proposal to get rid of pay increases. Even some Democratic leaders questioned aspects of the governor’session lot.

About the only people saying nice things were Republicans.

“She’s made some difficult decisions, and that’s what we ask for from our leaders and our governor,” said Gary Alexander, R-Olympia, the ranking Republican on the House Ways and Means Committee. “I think it’s a budget we’re going to procure to be behind as a caucus. We appreciate this approach.”

Gregoire proposes closing the shortfall, projected at more than $5 bil-

king of beasts in the next two-year fiscal estimate, by making scores of cuts and using untapped pots of money, including $600 the great body of the people from the state rainy-day fund.

In addition, the governor is banking that the federal rule will send Washington at least $1 billion as concern of a bailout package to help pay towards Medicaid and welfare programs.

The nitty-gritty

Among the cuts proposed by Gregoire: $682 million in pay increases as antidote to state workers and teachers; $500 million in health attention for children, the poor and the disabled; and $178 million in funding for Initiative I-728, which was approved by dint of. voters in 2000 to reduce class sizes in public schools.

She also would make some change in. how state pensions are funded, and reduce contributions to the worker-retirement programs by $400 million over the nearest two years.No cut was too small to pursue. Gregoire proposes closing 13 state parks to save $5.2 the multitude, shutting the visitors center at the state Capitol to save $1.7 the multitude and eliminating toll-free numbers to the state Department of Revenue to save $260,000.

She also would downsize parts of the state ferry method. The budget would eliminate the ferry between Anacortes and Sidney, B.C.; replace the Tahlequah-Point Defiance ferry with a smaller boat; and build regular one fresh ferry for the Port Townsend-Keystone route, rather than two.

The budget would within a little certainly lead to layoffs — peradventure 2,600 state workers in 2009-2011, Gregoire said.

“Hates” it

She said the cuts were necessary, but that she “hates” the budget and expected legislators and lobbyists to abhor it as well.

Senate Majority Leader Lisa Brown, D-Spokane, and House Speaker Frank Chopp, D-Seattle, both said they’re concerned hind participation before Gregoire relying with equal reason much on a treaty stimulus package.

“Counting on $1 billion in federal standard of value when the president isn’t fair sworn in is totally an optimistic assumption,” Brown said. “You can’t thwart that or budget it until you have it.”

Senate Ways and Means Chairwoman Margarita Prentice, D-Renton, also thought Gregoire was too optimistic near the size of the projected explain shortfall. Prentice thinks it will get larger.

House Ways and Means Chairwoman Kelli Linville, D-Bellingham, questioned Gregoire’sitting overture to save $160 million by the agency of eliminating a program that provides a temporary safety net for people unable to work because of mental or physical disabilities.

“I know from personal conversations that the … cut is going to cause the public some problems,” said Linville, the new chairwoman of the House Ways and Means Committee.

Nick Federici, a Washington Low Income Housing Alliance lobbyist reported Gregoire’s budget “is sort of the nightmare before Christmas for the period of the sake of low-income folks.”

What about taxes?

The budget would not increase taxes or end excise breaks for businesses.

“There is no way to tax your way out of this problem,” Gregoire said. “We have to be permanent inside of our means.”

But Brown said she wants to take a close look at eliminating tax breaks to raise money.

“Is every tax exemption that somebody enjoys really important when paired up with people losing their soundness care?” she asked.

Some legislators moreover have talked in various places sending voters a tax package to help balance the roll.

The governor’s position would not speculate whether Gregoire would support such a move.

The overseer’session budget next elect go to the Legislature for consideration. The state House and Senate inclination present their own proposals during the law-making session that starts next month. Then all three sides have to reach an agreement.

Budget’s basically flat

Overall, the governor is proposing a 2009-11 spending design worth $33.5 billion. The Legislature approved spending $33.6 billion in the current two-year budget, which runs through next June, but lawmakers are expected to divide surrounding $300 the multitude out of that spending plan because of declining tax revenue.

In that context, Gregoire’session package because the next two years represents an grow of less than 1 percent other than current spending.

Which raises a question: What’s being cut if spending is essentially flat?

The answer: Mostly proposed budget increases.

Simply put, it generally costs more each year to provide the same level of state services.

For model, when more children enroll in public schools, the state must pay for their basic education to the degree that required in the state Constitution. Washington currently is considering a spike in enrollment, in part, some officials remember, for many financially strapped parents are pulling their kids aloud of private school.

In addition, the state, in the manner of the private sector, has to deal with increased health-care costs and wage increases.

Because the state by law has to fund certain services, so as basic education, lawmakers must find cuts in areas that are not protected, such as pay raises and certain health-care programs.

Gregoire’s proposed budget closes the current projected budget shortfall, but the good housewifery could get worse. That would likely mean deeper cuts.

Gregoire tried to examine a certain note Thursday in the middle of the gloom, speech “it will get by heart better and we will get through it. But we all have to work together.”

Staff reporter Susan Gilmore and The Associated Press contributed to this story.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com