Erica and I sat down with Gov. Chris Gregoire last week. Here's an excerpt from the conversation. (And here's the first installment of the interview, which we published yesterday.)

PubliCola: Do you anticipate that February's revenue forecast is going to be positive? [Some legislators are hoping that it will be and are hoping it will change the budget discussion.][pullquote]"It's kind of hard to remember what my goals were. They've been washed away by a tsunami."[/pullquote]

Gregoire:  No. Arun Raha [the state's chief economist] will still tell you there is four times more likelihood that it will go down than it will go up.

PubliCola: Has he given you any sense of how bad it will be?

Gregoire: If you look at last month's receipts, it's up a little bit because of property taxes, but once you take the property tax out, which you have to because it's an anomaly, then we're down.

PubliCola: So, how disappointed are you that during your term what you've dealt with is budget shortfall after budget shortfall? What do you wish you could have gotten done that couldn't because of the budget crisis?



Gregoire: It's kind of hard to remember what my goals were. They've been washed away by a tsunami. My focus was, how do we get prepared for the 21st century? We're an amazingly international state. We're really not like anybody else. When you look at our ports and our exports and what we do, if you look at the people in the state, we are very diverse. We have the headquarters of so many international companies. Our export is growing like crazy.

All of that means we have to up it and ready ourselves. We can't afford to have 30 percent of our kids-plus graduate from high school and not be able to get a job or go to college because they need to take a remedial course that they're going to drop out of. We can't afford to do that anymore. We need to look at advanced manufacturing and understand—there is the future. It isn't the manufacturing of yesterday. It's a new form of advanced manufacturing. Are we doing the research, are we doing the training, are we doing the education?

All those things are now in a crisis. I had set out at the beginning of my term to try and do it thoughtfully  and just work our way  in. And put more investment in, candidly. It's going to take more investment, rather than cutting it, which is what we're going now. It takes more money than we had at the beginning of my term.[pullquote]"If I was a Seattle Democrat I'd be frustrated too. You know why? I am. You've got to come sit in my shoes and see the struggle it is with this budget. It is mind-boggling."[/pullquote]

So, I've really completely changed where I am in my head. I'm not going to leave the legacy that I had hoped. I guess the legacy I hope I'll leave now is that to my successor  will inherit a state  that has prepared itself to come out of the recession positioned well for our people to succeed and our state to succeed.

PubliCola: Jay Inslee is hoping to be your successor from the Democratic party. He's consistently behind in the polls to the Republican attorney general. What advice do you give to Jay Inslee right now to turn it around?

Gregoire: I don't think where he sits in the polls today is bad at all. He has been back in Washington, DC, working while his opponent [McKenna] has been back here in the state running for office. Frankly, I am shocked that there's not a greater distance in the polls than what there is. I've told Jay I would not panic at all, and I said do not let those advisers tell you do this, do that, say this, say that, dress like this, dress like that. Be Jay Inslee. Let the people elect Jay Inslee as the next governor of the state of Washington. 

PubliCola: Is this from personal experience? Did you get some bad advice?

Gregoire: You know, when we went into all the recounts [in 2004], I started asking myself, did those people vote for me, the person I know, or me, some other person? I told Jay, I went through that soul searching. You've got people coming at you from every conceivable direction. You go out to a fundraiser and, say, there's 30 people and 30 people will say something different to you. You shouldn't say this and you shouldn't do that and you should do this and you should say that. You get frozen so that you don't know where to move. I said, relax. Be Jay. Jay is engaging. Jay is bright. Jay is a leader. Jay's what we need.

PubliCola: Part of the criticism we've heard is that Jay is also vague [on state issues], in part because he's been back in DC.

Gregoire: Part of [the problem] is he's being advised to stay clear of things. I don't think either candidate has been particularly clear on a lot of things, personally. Look at McKenna's idea that the way we're going to fund education is we're going to not fill vacancies in state employment. Okay, can I just lay out the facts for a brief moment? We've been doing that for years. For years. Number one. Number two, if I let everybody go in state employment, everybody go, it's 18 percent of the budget. Meanwhile, education is 50 percent of the state budget. Do the math.

PubliCola: We asked people what should we ask you, and one friend at a bar last night said, "Ask her when she became a Republican." And I think what he meant is the way you've handled the budget. He feels that Chris Gregoire  hasn't stood up for the Democratic value of reforming the tax structure. He said he was struck by your defense of state employees recently, but he hasn't seen that vigor before. Too little too late. How do you respond to that criticism that you don't resonate with Seattle Democrats, with Democrats who feel that that value system isn't there?

Gregoire: You know, if I was a Seattle Democrat I'd be frustrated too. You know why? I am. I am. You've got to come sit in my shoes and see the struggle it is with this budget. It is mind-boggling. We've already cut $10.5 billion, only to be told by the people in the state of Washington, no to two-and-a-half cents on a can of pop. No to two and a half cents on a can of pop! Okay.

PubliCola: So are Democrats like you who support a half-penny sales tax increase out of sync with the people of Washington on that revenue issue?

Gregoire: No, no, no. I think what the problem is, is people are afraid. They are absolutely afraid. That person I see over there who's homeless or without shelter because they got foreclosed on or lost their job. Am I the next in line? I think we are living in a state of fear that we either are one of those people or we're going to be one of those people unless we're very wealthy. The result of which is, we're not willing to say I'm going to spend new money on taxes.

The difference between that and what I'm trying to do right now is to say, do you want to leave behind a shredded education system? Are we going to turn our backs on our most vulnerable? Are we going to leave our communities unsafe? Surely it's worth a half a penny to do the opposite. Those are the values of the people of the state of Washington. So, I'm hopeful that that will resonate with people. I'm going to go out there and fight like heck to make it happen.[pullquote]"We're without choices right now."[/pullquote]

But to your friend, I would say you know, sit in my shoes. We're in a unique time in history. We're not like when I was in college and out talking about the war. We're unique. We're cynical, we're afraid, we're unwilling to put money on the table. If you looked at the most recent data, we're paying less in taxes per $1,000 than we have in 50 years. If I go out and tell the public that, they will say I am absolutely not telling the truth. If you ask the public, when was the last time we raised the sales tax, they'll say to you it was yesterday, and that was on top of having done it the day before ... and the day  before that. And if I say, no, it was 1983, they will say you're lying to me.

In order for us to be able to do the things that I think we must do to save the values that [your friend] embraces, we have to do some reforms, some reforms in education, some reforms in state government. We're without choices right now.

PubliCola: What do you think of Attorney General Rob McKenna's education reform agenda? [McKenna, a Republican, is running for governor.]

Gregoire: What is it? You'll have to help me on that.

PubliCola: It seems more aggressive than the one you laid out. [Gregoire announced a reform proposal last week—AP report here— that will put a pilot project of 4-tiered teacher evaluations in play statewide]. It ties teacher evaluations to student test scores, calls for charter schools, and allows the state to step in and take over failing schools. It's in sync with President Obama's education reform agenda. The proposal you came out with last week seems like a "lite" version of that to education reformers [because the evaluations aren't tied explicitly to "student academic growth"].

Gregoire: I don't really think so. I think what it is is a Washington reform. The most recent studies on charter schools come out of Stanford. And there's no guarantee of anything there. As many as there are doing OK, there are an equal number that are not. … Why would we go down a path where there's no big success to be had? And our voters have already turned [charters] down three times.

I developed this lab school idea, which serves two purposes: One, you have our four-year university schools partner up with one of our bottom five percent schools and really run the school and get them to transition out of their low performance. And two, you really do take your schools of education and improve them dramatically, because if they're going to train teachers, what better training for them than to be inside a classroom and see what works and what doesn't work?

PubliCola: What about tying test scores to teacher evaluations?

Gregoire: So, come with me to a school that I went to in the Renton School District---28 kids in this guy's classroom when he starts the school year, and at the end of the year he has eight of the original 28. So we're going to say to a teacher, your career rests and falls on a class of eight because the other 20 transferred out?

Is it hypothetically a good idea? Sure---when we can make sure that it works. Until then, I think it's a huge mistake.

PubliCola: Using that logic, you get critiqued from the other side, the union side. Your proposal will be statewide evaluations. So, why should a teacher in one district be judged the same way a teacher in another district is judged when there are different communities and different needs?[pullquote]"If you ask the public, when was the last time we raised the sales tax, they'll say to you it was yesterday. And if I say, no, it was 1983, they will say you're lying to me."[/pullquote]

Gregoire: There are eight criteria and 16 school districts that have been piloting, from rural to urban, and those 16 have done it together and they have done a marvelous job ... because it didn't come from the top down, it came based on research and best practices of education experts around the country.

So, if I am [an] unsatisfactory [teacher] here, then it's my principal's job to take care of me here, and if I can't get it together over the course of that school year and raise myself to basic, I need to look for employment elsewhere. And elsewhere doesn't mean I go across town [to another school.]

PubliCola: Speaking of reform, what do you say to the the Republican mantra: "Reform before revenue?"

Gregoire: I say to them, "What does that mean?" What reform? What reform?

Gregoire spent the next five minutes of the interview taking the Republican reform recommendations one by one—tort reform, health care reform, and sharing tribal gaming revenues. She said, “How much are you gonna book against the $2 billion shortfall? … I’ll tell you what you’re gonna book: Nothing.”

Her most exasperated answer came when I reminded her about one of the GOP’s big reform recommendations: Making state employees cover as much of their health care costs as their counterparts in the private sector.
“I’m happy to [make workers pay as much for health care as they would] in the private sector when they’ll pay state workers what they would earn in the private sector.”

She’s got a point: According to this 2010 study, state workers typically earn 11 percent less than private sector workers in comparable jobs.

Here's Part 3.