Erica and I sat down with Gov. Chris Gregoire late last week (preview outtake here).

We got right into it. First up: Tax reform, Occupy,  gay marriage, and her partial veto of this year's legislation to establish medical marijuana dispensaries.

PubliCola: The Republicans have been happy to hear you embrace their mantra, which is "Government can't do it all." That's something you've been saying about the last few budgets.

Gregoire: I say it regrettably. They don't.

PubliCola: The Democrats complain  that there is a structural budget deficit and that you haven't embraced their mantra---that the state needs new revenues. They say your proposal to temporarily increase the state sales tax does not represent revenue reform. How do you respond to that criticism?

Gregoire: I talked to some of my friends in the Senate Democratic caucus yesterday, and I said, you know what, this state has to have a structural change on taxes. We're hurt more by the failing of Congress in August than almost any other state because we don't have the backup system of an income tax. ...

That's why [we had] the negative $1.4 billion forecast in September. At the same time, we're based on, historically, virtually an all-manufacturing based economy, and we're not anymore. There's still, for example, Boeing, but we're also a service-based economy, and we don't tax services.[pullquote]"I don't think their message has gotten out. I think they've got a heck of a message. I just can't hear it. They don't coalesce behind the message of what they think they're trying to portray, and they diminish everything they have to say."—Gov. Gregoire on Occupy[/pullquote]

So I talked them yesterday. We're going to have to have a fundamental structural change. Their question to me was, why not now? And I said, because I don't believe---if they're not willing to do a high earners' income tax [the failed Initiative 1098], [or] two and a half cents on a can of pop [repealed by Initiative 1107]---that the voters are ready right now. And I refuse to do anything to jeopardize the fact that we need to get out of this crisis, and we're not going to get out of this crisis if we can't pass at least a half penny sales tax.

PubliCola: When you first took office in 2005, we faced a $1.7 billion deficit. This problem has persisted.

Gregoire: No. We pulled right out of it. Remember, we were in one of our better times. We fully funded [Initiative] 728 [reducing K-12 class sizes].

PubliCola: But with hindsight, wasn't that a mistake to keep going, hey let's fully fund it as revenues ticked up, knowing that ultimately, the state has a structural budget deficit?

Gregoire: What do you want to do? An income tax? We tried that with Mr. [Bill] Gates [Sr., who supported the high-earners' income tax initiative]. I was one of his biggest supporters. And I thought that was the way to go—high-income earners—and particularly this time in a recession. And what did the voters say? No.

PubliCola: Do you think, though, that with the Occupy protests, the mood has changed now and perhaps going with a sales tax increase is tone-deaf? Is there a change in mood right now?

Gregoire. Uh-uh.

PubliCola: Why not?

Gregoire:  I don't think their message has gotten out. I think they've got a heck of a message. I just can't hear it. They don't coalesce behind the message of what they think they're trying to portray, and they diminish everything they have to say, so there's no clear message of, it's time that we stop building up an upper class and realize we're losing the middle class. That doesn't come through. And I think that's fundamentally what they're trying to say. [pullquote]"Bottom line: Do we need some kind of tax reform in the state of Washington? At some point, yes. Is now the time? No, in my opinion."[/pullquote]

PubliCola: So, what are you hearing them say if you're not getting that message?

Gregoire: Oh, ten things times ten. It drowned out, frankly, some voices that needed to be heard and didn't get a chance to because of it. I'm a big fan of the message that I think they have coalesced around, but they just can't seem to get out there and constantly drum that message, and you and I know that's what required.

Bottom line: Do we need some kind of tax reform in the state of Washington? At some point, yes. Is now the time? No, in my opinion. If we're not going to go the high-earners' income tax that was put on the ballot by one of the most respected and distinguished people in the state of Washington [Gates] at a time when people are really upset about how high income earners are profiting and the poor are getting poorer and the middle class is getting wiped out, no, I don't think we can.

And we can't afford to do an all-cuts budget. It will leave a shattered mess behind. I had to go to something that I knew could raise a decent amount of money that could be done right now. Is it regressive? Sure. But I also think it's regressive to take away the quality education that our kids deserve, or the support that our developmentally disabled need. Or community safety. I think that's all regressive too.

PubliCola: Do you support legislation legalizing gay marriage?

Gregoire: [Legislators are] going to have to get me a bill. They haven't been able to yet. I need to see what it says. What's it going to do with domestic partnerships? What's it going to do with domestic partners who come into the state of Washington?

PubliCola: Have you told [state] Sen. Ed Murray and [state] Rep. Jamie Pedersen [the gay state legislators leading the charge for marriage equality] those concerns?

Gregoire: Absolutely. In October. They're still working on it. They're working on it.

PubliCola: If they can get a bill you feel legalizes gay marriage, but doesn't undermine the domestic partnership rules, would you sign that?

Gregoire: Then you've got to deal with the churches. I told them that in October as well. I'm not going to tell the churches ... I'm not get involved in their decision whether they're going to perform marriages or not. I don't think the state ought to get involved in that. They [Murray and Pedersen] agreed, and they said they were going to get me a bill, and they have not yet gotten me a bill.

PubliCola: So, a bill that deals with the churches exemption, doesn't undermine domestic partnerships, legalizes gay marriage...

Gregoire: I need to see the bill.

PubliCola: Do you support I-502 [the measure to legalize and sell marijuana in regulated stores and tax it for an estimated $215 million per year]?

Gregoire: No.

PubliCola: Because?

Gregoire: Because are we going to have a bunch of federal busts. I want the feds to change the law. [Gregoire is referring to medical marijuana law, not marijuana legalization in general.] If you want to legalize marijuana, let's do it at the federal level. If we want medicinal marijuana, let's do everything we can and force  the feds to reschedule.[pullquote]"No governor has ever petitioned to reschedule marijuana to [Schedule] Two in the United States."[/pullquote]

PubliCola: Well, you've petitioned the feds to change marijuana from a Schedule 1 to a Schedule 2 drug [making it more like medically regulated methadone, so it can be prescribed.] But reform advocates point out that petitions to change the status of medical marijuana have not worked before—and the thing to do is to set the stage at the local level and go forward with bills like the one that the legislature passed this year for regulated dispensaries.

Gregoire: They're busting people who are not doing it, if it can't be proven to be directly medicinal marijuana related. So, here's what you're doing with patients. You're either making them feel like they're breaking the law or they in fact are breaking the law. There are plenty of people who are frail. How are they supposed to go out there and be able to get access to it? So, we have to have it as available as possible to them.

No governor has ever petitioned to reschedule marijuana to [Schedule] Two in the United States. It's never been done. They've always rescheduled to Three. ... I think it's interesting that we have to ask to reschedule to an opiate level. [She is the first governor to propose a change to schedule 2, but it's not the first request.]

When I talked to [Health and Human Services] Secretary [Kathleen] Sebelius, she sent me an email and she said that sounds very thoughtful. We need some stability.

PubliCola: Wouldn't the medical marijuana legislation that you vetoed have provided more stability? [Gregoire vetoed a legislation regulating medical marijuana dispensaries because she felt state employees would be at risk of arrest for facilitating the sale of an illegal drug.] Some people complain that your veto complicated  the landscape so that you've got conservative areas using it to ban medical marijuana dispensaries and liberal areas  having grow coops join together, but they're not regulated. And it's created a mess. How do you respond?

Gregoire: I didn't do anything. Sorry. I vetoed it for very clear reasons. I vetoed it because the feds made it clear in Washington State and other states [that they were going to enforce federal law], and they're enforcing it now. For example, the four AGs in California said not long ago they're going to aggressively enforce in California.

[Local advocates for medical marijuana point out that the feds have filed a legal brief against Republican Arizona Governor Jan Brewer for trying to toss a medical marijuana law, while the feds point out they are not arresting state employees for helping dispense medical marijuana. Additionally, prior to Gregoire's veto, medical marijuana advocates pointed out that she based her assertion that state employees would be at risk of prosecution on the US Attorney's general finding that state employees who break federal law are not immune from federal prosecution, but the finding never made the case that state employees would be breaking any law by carrying out the medical marijuana regulatory scheme.]

Next up: The lottery, education reform, her legacy, Jay Inslee, and more on the budget.

Here are Parts 2 and 3 of the Gregoire interview.
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