1. As you read this, Morning Fizz is driving South on I-5 to Olympia on our way to Gov. Chris Gregoire's 9 am press conference where she's expected to release an all-cuts budget in response to the $2.6 billion budget shortfall.

From the reporting we did yesterday , (talking to low-income health care advocates and the governor's office) it sounds like Gregoire's budget is going to eliminate the state's Basic Health Plan, which provides inexpensive health care to the "working poor"—people making 200 percent of the federal poverty level, or $36,000 for a family of three and $21,000 for one person. Eliminating the BHP would immediately leave about 65,000 low-income people without health care.

BHP enrollment was already scaled back from about 100,000 people earlier this year during last session's $9 billion budget crisis when the plan took a 43 percent hit (a $255 million cut), eliminating 35,000 people and bringing the $593 million program down to a $340 million program.

Higher education, K-12 funding, state prisons, long-term care, and economic services are among the other things on the chopping block along with the BHP—totaling $7.7 billion in discretionary dollars .

Of course—and the governor's office told me this yesterday—the all-cuts budget is exhibit A in Gregoire's case to raise taxes. (She's coming back with an alternative budget in January that will propose new taxes to restore today's dramatic cuts.) The governor is required to propose a balanced budget  within currently available revenues.

The Republicans, who we also checked in with yesterday, are wise to Gregoire's tax increase game plan. They are dead set against tax increases. Unlike Democrats who believe cutting government services will create a recessionary spiral, the GOP believes increased taxes will create a recessionary spiral.

The Republican's mantra to ward of tax increases: Don't cut the budget. Reform it.

No, the GOP isn't calling for a progressive tax system. (Footnote: A recent study found that Washington state has the most regressive tax system in the country—meaning the poorest people pay the biggest percentage of their incomes on sales, property and excise taxes; the middle class pays a smaller percentage of their incomes on taxes; and the rich pay the smallest percentage of their incomes on taxes—17.3, 7.6, and 2.9 percent respectively.)

The GOP leadership is calling for more efficient programs—a fuel efficient car rather than a gas guzzler, they argue, is a better way to balance the budget than junking the car altogether.  One GOP staffer asks rhetorically: "Do you take a machete to the budget or do you look at different programs and reform them and get them to run more efficiently?"

Republicans say:

•Put a time limit on the availability of General Assistance for the Unemployable (GAU).

•Re: the BHP: Eligibility requirements should be tightened. (Again, the BHP is currently available to the "working poor," people making 200 percent of the federal poverty level.)

•Rein in union-mandated pay increases. State Sen. Joe Zarelli (R-18), for example, says even though Gov. Gregoire pledged to freeze state employee salaries, she has made $83 million in pay raises thanks to timid bargaining with the state employees unions.

Finally, the GOP tells PubliCola the governor should follow the "Priorities in Government" approach developed by former Democratic Governor Gary Locke and then-state Sen. Dino Rossi, which creates a priority list of government programs. The theory: You look at available revenues and, checking off each item, you fund as far down the priorities list as you can go.

The problem, as Gov. Gregoire will likely lay it out this morning, is that when available revenues can't even get you as far down the list as prisons and the Basic Health Plan, you're in trouble.



2. There were two big stories yesterday re: national health care reform.

A) In muddled news for liberals, a compromise among bickering Democrats turned the public option (the holy grail for liberals) into a third string back up if private insurers failed to provide affordable  plans through a federally regulated system.

Huffington Post has a good mash-up of all the articles, including news about Sen. Maria Cantwell's leadership role extending federally funded coverage to people making 300 percent of the poverty level through state-run plans by giving states more negotiating power with insurance companies. Sen. Cantwell's key amendment —which we noted a few weeks ago—is modeled on Washington state's, um, Basic Health Plan.

B) Liberal Democrats scored a clearer victory earlier in the day when the senate voted 54-45 for a measure to table conservative Democrat Sen. Ben Nelson's (D-NE) amendment to ban federal funds for health plans that cover abortions.

Here's the roll call . A 'yea' vote means yes, I want to table Sen. Nelson's anti-choice amendment.

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