Rossi will defer his transportation plan due to WA state economic crisis

Two of his big plans -- money for roads and eliminating the estate tax -- would take back seat to a balanced budget, the candidate says.

By Jerry Cornfield
Herald Writer
OLYMPIA -- Voters counting on Dino Rossi for a quicker fix to transportation problems and demise of the death tax may be waiting longer than they expect.

Republican gubernatorial candidate Rossi is delaying pursuit of those two key promises separating him from Democratic Gov. Chris Gregoire, blaming a worsening state budget outlook as the cause.

"First off we have to right the ship, financially," Rossi said.

If elected, Rossi said he won't try to divert hundreds of millions of dollars in sales tax into road projects in the next two years because the money may be needed to help overcome a projected $3.2 billion shortfall.

Likewise, he will wait at least two years before proposing to eliminate the estate tax -- a source of roughly $105 million a year since 2005.

"We are going to be facing a tough biennium. He realizes the first thing he'll have to do in office is to balance the budget," said Jill Strait, Rossi's campaign spokeswoman.

Changing how the state funds transportation and erasing the estate tax are two of the most established planks in Rossi's platform.

He acknowledges his shift in position on them in interviews. In front of crowds, he's still touting his transportation plan and his commitment to repeal the estate tax, without mentioning any delays.

It's a significant new shift, said Gregoire's campaign spokesman Aaron Toso. Those have been two of Rossi's few specific proposals in this campaign, he said.

"Rossi is breaking his campaign promises before the campaign is even over," Toso said. "There isn't a reason for voters to believe anything Rossi has to say."

Toso added, "At least Rossi finally agrees that his campaign promises would create an additional $1.3 billion 'Rossi deficit' on top of any projected shortfall."

Rossi's adjusted stance won't matter for voters because at this stage, emotion, more than any issue, is influencing them, said Republican political strategist Dave Mortenson.

"At this point in the campaign voters are tired of the rhetoric. It boils down to what their gut feeling is," he said.

Terry Thompson, a campaign consultant for Democratic candidates, said he didn't think it will sway many voters either and shows Rossi is "exercising caution" in his positions at this stage.

Rossi made a big splash in April when he laid out a $15 billion transportation plan. The majority of the cost is for major road projects to be finished in the next 12 years. The list includes $600 million worth of improvements on U.S. 2.

Roughly half the money for Rossi's plan comes from using 40 percent of the sales tax collected on the sale of new and used cars. That money, estimated at about $400 million a year, now goes into the general fund for programs such as education and health care, rather than roads.

Since April, the deficit projection grew from $2.5 billion to its current $3.2 billion, prompting him to rethink his strategy, Rossi said.

"I have to right this ship first," Rossi said. "We are going to get all the projects started within the first four years. The whole goal is to get all of them finished in 12 years."

Rossi did not say how he will generate money for those projects like U.S. 2 that are not now funded in the state transportation budget. Strait said it is his goal to be tapping into the sales tax by the end of his first term.

The inheritance tax is a defining issue for the candidates.

In 2005, after a state Supreme Court decision invalidated an old estate tax law, Gregoire had it rewritten and pushed for its reinstatement. Voters later affirmed it.

According to the governor's budget office, 99.5 percent of estates do not pay the tax.

Since it came back on the books May 17, 2005, 808 estates have paid $314.5 million, said Glenn Kuper, spokesman for the Office of Financial Management. The money is earmarked for education.

Rossi wants to get rid of the tax and to scale back taxes paid by businesses. While campaigning, he says taking those steps will help small companies and create jobs.

Yet in an interview, he said he will put off reducing any taxes until the state starts taking in more money than it is spending.

"Once we get that on the right plane, there will be monies available above the line of spending that could be available for potential tax reductions," he said.

Strait said that will not likely occur until at least 2011.