Economic highs, lows frame Gregoire's legacy

Call her the Great Recession governor.

Gov. Chris Gregoire leaves office in two weeks, and most report cards on her eight-year leadership of the Evergreen State grade her on the deep curve of the economic collapse that dominated her second term and, in many ways, undid some of her earlier work.

Former Senate Republican Leader Mike Hewitt said that, in his mind, there were actually two Gregoires – one governor for each term, separated by the financial crisis.

“She had her spending term and she had her realization-and-savings term — or reform, whatever you want to call it,’’ Hewitt said, clearly preferring Gregoire’s second term when she showed she could be chilly to tax hikes, willing to freeze new regulations and hold off labor’s demands for pay increases.

Gregoire, a Democrat who took office in January 2005 under the cloud of a legally disputed election result, enjoyed the good times of a growing economy for only a few years — growing the state’s government cost and size until it all came crashing down.

There was simply no way for Washington to escape the colossal downward plunge caused by the financial crisis that struck the nation and the world in 2008.

“I think she looks back and sees some of the things she’s put in place — and she’s held on to some very steadfastly, like early childhood education — but other things she would like to have done or did do, she’s had to undo, because of the financial situation of the state,” said Becky Bogard, a lobbyist whose friendship with Gregoire dates back decades. “And that’s been very hard for her.”

The toll: Tens of thousands of people cut from the rolls of the state’s subsidized health insurance. Three prisons and a juvenile detention center closed. Four-fifths of state parks’ funding from the general fund gone, with parks struggling to make up the difference with fees. Soaring tuition replacing plummeting state funding as the main source of four-year colleges’ budgets. And state government downsized to the staffing levels of the mid- to late 1990s.

No wonder Gregoire’s favorite moment was something that didn’t involve money: That was the election-night celebration of voters ratifying the law she championed and signed to recognize the marriages of gay men and lesbians.

Gregoire, a Catholic who came to her support of same-sex marriage over years, says she singles out that memory “because I have so struggled with this issue and I looked out at that crowd that was just screaming. It was standing-room only. It was just huge. And I thought to myself, how as a nation could we have denied equality? How could we have done that? And I felt bad that it took me so long to get myself to the right decision. … But to see what it meant to those folks. It was amazing.’’

It was a historic moment, making Washington one of the first three states to simultaneously recognize same-sex marriage at the ballot box in what Gregoire calls the civil rights issue of her adult daughters’ generation.

FIRST TERM: BEFORE THE CRISIS

Gregoire’s first term could not have gotten off to a much rockier start. It took three vote counts to win, and then Republican rival Dino Rossi went to court to challenge her 129-vote margin of victory amid evidence felons had voted and that some election shops had counted more votes than ballots issued.

On her inauguration, some Republican lawmakers turned their backs or refused to stand for her inaugural address to a joint session of the Legislature.

In the end, Gregoire emerged from the court fight as the 133-vote victor, but she could not escape the taunting of critics who doubted the court’s ruling and called her Queen Christine.

At some point, her public-relations handlers changed her name, insisting that she be called Chris instead of Christine.

By then, her luck had turned and she had won acceptance in her first year on both sides of the aisle to pass a transportation tax package. At 9½ cents per gallon of gasoline, it was the largest in state history.

The plan had backing from business and labor, but it took Gregoire’s diplomacy in the Legislature to get the high-centered transportation package back on track. A top aide, Marty Brown, called it “the turning point” for her administration.

For most of Gregoire’s two terms, statehouse veteran Brown was by Gregoire’s side — as a legislative director showing her the ropes of the Legislature in 2005 and later as her budget director. Brown says he’s never seen anyone more prepared than Gregoire or a governor who was as hands-on with lawmakers.

“She … talked to all the governors and they said the thing you’ll hate the most is the Legislature,” Brown said “But I’d say fairly early on she got so she liked it. She likes to take on complex issues and negotiate them.’’

Before long, the state’s economy began gaining speed and throwing off surpluses. The first pair of two-year state budgets under Gregoire together increased spending by more than 25 percent.

The money helped make preschool and health insurance for children more widespread, funded lower class sizes in schools, and gave colleges money to enroll new students. Gregoire won legislative approval to create a new Puget Sound Partnership and a Department of Early Learning.

“Her vision of a seamless education system from pre-kindergarten to higher education was spot on,” said Lisa Macfarlane, who led the League of Education Voters before moving recently to Democrats For Education Reform.

Gregoire made efforts at health reform that in some respects foreshadowed later legislation at the federal level. Now she credits those efforts for getting the state ready for Obamacare and for reducing health care inflation in Medicaid, the shared federal-state program for low-income and disabled Americans. She says Medicaid inflation now will drop below zero in Washington, in sharp contrast to other states that see growth rates of more than 4 percent.

Budgets also increased compensation for public workers. Those approved in 2007 added close to $2 billion in state outlays for employees, including pay raises, new employees, and larger contributions for pensions and rising health insurance costs.

“The first contract we had with her we thought was a fair contract. I would not use the word generous when you look at state employees being as far behind (the private sector) as they are,” said Greg Devereux, executive director at the Washington Federation of State Employees, the largest state employee union that represents close to 40,000 people.

Rossi, the Republican whom she defeated so narrowly in 2004 and then by a wider margin in 2008, said Gregoire squandered a surplus.

“She ended up doling it out to her constituency groups that supported her,” Rossi said. “She turned the biggest surplus into one of the biggest deficits they’ve ever seen.”

Gregoire said the spending increase was reasonable coming out of a previous economic downturn. She said that if the money left in reserves had been any larger, lawmakers feared it would tempt a voter initiative to cut taxes. Moreover, voters approved a rainy day fund that locked up some of the surplus for use when times got bad.

Dan Evans, a Republican who is the only Washington governor to serve three consecutive terms, said he does not fault Gregoire entirely for what he saw as overspending.

Evans said Gregoire was helped into office by labor groups and others that wanted to be treated well and that favored larger government outlays. Plus, she was up against a Legislature dominated by liberal Democrats who wanted to increase spending as the good times rolled.

“In the second term, which was a great deal more difficult, I think she got more assertive and didn’t let the Legislature (have the upper hand),” Evans added. “She did get tougher as time went on. She really did show some great leadership when it came to tough times. That is when leadership is most difficult.’’

SECOND TERM: AFTER THE CRISIS

On the eve of Gregoire’s re-election in 2008, again over Rossi, there were signs the state’s economy was finally catching the recessionary flu that other parts of the country had been experiencing for months. But things soon got worse than anyone expected.

The collapse led to massive budget cuts worth billions of dollars in real and projected spending. Democrats pushed a tax package through in 2010 — drawing criticism from those who noted Gregoire’s campaign stance against taxes.

At the bargaining table, Gregoire managed to win 3 percent reductions in pay and hours worked for most state employees and higher employee contributions for health-insurance coverage. But she held off legislators who talked of doing more.

Unlike governors in several Midwest states, Gregoire flatly rejected harsher rhetoric about weakening labor unions. Gregoire never wavered in her belief that collective bargaining was a valid way to iron out differences between management and workers, Devereux said.

In part because of the recession, Gregoire worked with legislators to overhaul the workers’ compensation system, eliminate cost-of-living increases in closed pension plans, and consolidate five central-service agencies into three.

Several of those moves were complicated policy changes that didn’t make for big headlines. Gregoire insists they amounted to a resetting of state government. All overcame varying levels of opposition from the unions that had helped elect her.

“At the end of the day, Gregoire had to look the folks in the eye from the unions and say ‘no,’ ” said Don Brunell, president of the Association of Washington Business.

She also issued an executive order to halt the development of new regulations. Although business advocates often say regulations remain excessive and tangled, Brunell said the bigger problem today is with federal and local-government rules. He gives Gregoire credit for finding solutions when policy fights got high-centered at the Legislature — or in Congress, as when Boeing was at risk of losing an Air Force tanker contract to European jet maker Airbus.

Both Brunell and Jeff Johnson, president of the Washington State Labor Council, praised her for her role in advocating for Washington’s aerospace jobs.

“The biggest thing was trying to keep things halfway afloat during the recession, which created huge problems for state government and local governments as well,’’ said David Nice, professor of political science at Washington State University, whose specialties include following the work of governors. “The fact it lasted as long as it did made things difficult.”

Nice gives Gregoire credit for an abundance of smarts and a willingness to work hard and do homework. But he says she suffered the plight of most governors the past few years: The economic trouble derailed many pieces of her agenda, and he said his criticisms of her cuts to higher education can also be laid on other governors around the country.

LEFT UNDONE

In two key areas — education and the environment — Gregoire had great ambition, made changes, but never got as far as she wanted.

The Washington Education Association says Gregoire did well by education under the circumstances. Mary Lindquist, president of the teachers union that represents nearly 82,000 public school and college employees, said Gregoire showed her “true colors” in 2005. That was when she moved to restore funding cuts taken in the budgets crafted by Rossi and former Gov. Gary Locke.

Lindquist said Gregoire invested in education, made all-day kindergarten a priority, sought funding for teachers that receive national board certification, and was a cheerleader for the constitutional amendment that lets voters approve school levies with a simple majority.

The union fought legislation this year to tie teacher evaluations to student test scores, saying it blamed teachers for poor performance by kids in an underfunded system. But Lindquist said the governor showed respect for teachers and a willingness to look at research to find an eventual compromise.

From the other side of that debate, Macfarlane gives Gregoire credit for strengthening the accountability legislation, saying it will hold poor-performing teachers accountable by using evaluations in layoff and other personnel decisions.

Macfarlane said the state’s high school graduation rates are still a problem and that financing for public schools is another obstacle. But she said not all of the problems are the governor’s fault, given what she says is a broken tax system and given that responsibility for schools is split among so many groups — including the state schools superintendent, governor and Legislature.

“I think she is in a long line of governors in this state who wish they had done more for education,’’ Macfarlane said.

Gregoire’s latest budget as a lame-duck governor calls for more than $1 billion in new spending for K-12 schools, much of it made possible through new taxes she was unwilling to propose when she was running for office.

Gregoire has her greatest misgivings around the Puget Sound cleanup. While she won passage of legislation to create a single Puget Sound Partnership agency in 2007 and some shellfish beds have been reopened to harvests, Gregoire did not secure major new funding to make more dramatic progress.

But Joan Crooks, executive leader of Washington Environmental Council, said Gregoire has put the state in a good position now to actually move ahead with Puget Sound restoration.

Environmentalists did raise eyebrows at Gregoire’s executive order to suspend rulemaking by agencies, but the list of issues that went their way under Gregoire is actually quite long.

Brendon Cechovic, executive director of the Washington Conservation Voters advocacy group, said Gregoire’s support for hitching the state’s clean air standards for cars to California’s higher standards in 2005 was her first “home run.”

The list also includes funding for public transit in the transportation package; laws that require recycling of electronic waste and reduce toxic materials in bedding and children’s products; and a deal she brokered with Canada-based TransAlta to phase out its coal-burning power plants at Centralia by 2025, making Washington first to phase out coal-burning inside its borders.

“We always felt like the governor shared our values, and man, is she a fighter. She usually lined up for us,” Cechovic said.

TRUSTING HER WORD

“I think she’ll be known as the governor who could negotiate tough deals,” said House Republican Leader Richard DeBolt of Chehalis, who works for TransAlta and says Gregoire was a fair broker in talks that ultimately are putting his firm’s coal-use off limits.

Gregoire brokered agreements on health care, unemployment insurance benefits, industrial insurance and others. She helped negotiate an end to last year’s teacher strike in Tacoma and to a labor dispute over a grain terminal in Longview.

“Everybody on both sides of the aisle recognize her as negotiator in chief,” longtime Democratic Sen. Karen Fraser of Thurston County said.

Gregoire’s reputation for getting agreements preceded her time in the governor’s office. She had made her name as attorney general helping bargain with tobacco companies to strike a $206 billion settlement compensating states for tobacco-related illnesses. Before that, as an assistant attorney general, she participated in talks that reached another settlement resolving claims of gender discrimination by raising pay for tens of thousands of mostly female state employees.

Rossi criticized Gregoire for breaking promises on taxes and for failing to be clear about the impending deficit when she ran for re-election, but many lawmakers said they could take Gregoire’s word to the bank.

Wenatchee Republican Rep. Mike Armstrong recalled one final day of session in Gregoire’s first term when discussions moved from her office to his to DeBolt’s. At one point, Armstrong said, he and the governor stepped into a women’s bathroom to talk privately for a moment while the governor’s bodyguard waited outside.

A proposal dealing with fuel distributors was holding up the final dropping of the gavel, Armstrong said. House Republicans had some objections to parts of the legislation, and Gregoire told them that if they passed it anyway she would veto the problematic sections.

As Gregoire and Armstrong both described it, DeBolt wanted the promise in writing. Gregoire told them she doesn’t work that way. Her word would have to be good enough, she said.

“I said ‘no, you know, I trust her, I think she’s good for her word, and until I’m proven differently I’m going to take her at her word,’ ” Armstrong recalled. “And quite frankly in the eight years she was there, I never had an instance where she told me one thing and did something else.”

Brad Shannon: 360-753-1688
bshannon@theolympian.com
Jordan Schrader: 360-786-1826
jordan.schrader@thenewstribune.com