If Democrat Christine Gregoire is sworn in as Washington's second woman governor, the months following her Jan. 12 inauguration will be daunting. Her authority as governor could...

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OLYMPIA — If Democrat Christine Gregoire is sworn in as Washington’s second woman governor, the months following her Jan. 12 inauguration will be daunting.

Her authority as governor could be undermined by the fact she was elected by the narrowest margin in state history, and her victory could face months of legal challenges. It also won’t help that many people are convinced Republican Dino Rossi was the true winner.

“There are, of course, a huge number of people very unhappy with the result,” said Secretary of State Sam Reed. “Half the people didn’t vote for the person who will be moving into the office, so that will be a challenge of leadership.”

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What’s more, Gregoire would take office at a time when the state must grapple with a projected $1.8 billion budget shortfall, making it hard for her to stick to some of her major campaign positions — especially her stand against raising taxes.

If Gregoire becomes governor, she will be teamed up in Olympia with a Democrat-controlled Legislature. Many of the Democratic Party’s biggest supporters will press for increased spending on education, health care and public-employee pay raises.

“Christine Gregoire, if she becomes governor, is going to face a horrible dilemma,” said state Republican Party Chairman Chris Vance. “Either she raises taxes just as the economy is beginning to recover or she infuriates the interest groups that got her elected.”

Gregoire yesterday appeared to hedge on previous statements opposing tax increases.

“I never really said ‘no taxes,’ ” Gregoire said shortly after she was certified as the new governor-elect.

Yet during the campaign, she said repeatedly this is a bad time to raise taxes.

“To go out and tax people at a time when we’re just trying to get ourselves out of a recession, to me, is the wrong direction for the state,” she said during the state Democratic Party convention in June.

She also made a lot of promises to protect or restore programs that in recent years have faced spending cuts or freezes. For instance, she vowed to restore funding for voter initiatives to reduce class sizes and to give teachers annual cost-of-living raises.

The Democratic chairwomen of the House and Senate budget committees yesterday said new taxes will be needed.

“I do not believe you can do those things without more revenue,” said Rep. Helen Sommers, D-Seattle, head of the House Appropriations Committee.

State Sen. Margarita Prentice, D-Renton, incoming chairwoman of the Senate Ways and Means Committee, said that after Gregoire crunches the numbers, she’ll probably have no choice but to propose new taxes.

The types of cuts that would be required without new taxes “would be even more horrible politically for her,” Prentice said.

Sen. Lisa Brown, D-Spokane, the new Senate majority leader, said Gregoire will have critics no matter which choice she makes.

But if Gregoire goes for taxes, Brown expects she’ll find a Legislature that’s open to the idea. “You just have to come out and say, ‘This is what I’ve concluded, and this is what I believe.’ ”

Outgoing Gov. Gary Locke recently proposed about a $600 million tax increase that would pay for the class-size initiative, I-728, as well as teacher and state-employee pay raises, among other things.

Gregoire yesterday sidestepped questions about Locke’s proposal. “I’m not prepared to endorse or deny his budget,” she said.

Gregoire said Democratic lawmakers have pushed her to come out publicly in support of a tax increase. She said she is working on her own proposal. And, she said, “I’m not looking at taxes. I’m looking at efficiencies.”

Locke proposed raising nearly $504 million from “sin taxes” on beer, wine and liquor and a nickel tax on the cost of soda pop. An additional $96 million would come from a 1 percent gross-receipts tax on physician services.

Sommers said she liked Locke’s proposals for raising money. “I think they’re viable. I would vote for them,” she said.

During the campaign, the closest Gregoire came to supporting new taxes was her promise to take a “hard-nosed” second look at billions of dollars worth of tax breaks.

But the only one she ever mentioned specifically was a tax break worth about $200,000 a year for gold-bullion dealers.

Sommers said, “We could repeal a lot of exemptions, and that would raise quite a bit of money. So that’s one way to do it, but it’s proven to be very, very difficult.”

Some Republicans predict a repeat of 1993, when Democrats controlled the Legislature and the Governor’s Office and passed one of the biggest tax increases in state history.

“It’s a runaway train,” said Spokane Mayor Jim West, a Republican who served 20 years in the Legislature before stepping down last year.

West dismissed predictions Gregoire would be hobbled by her controversial, record-close election victory. Once she’s in office, he said, voters won’t think much about the election.

“They’ll look to what she does when she gets into office, not how she got there,” West said.

Reed agreed, saying leadership is established by how winners conduct themselves in office, not by a large margin of victory.

“We saw that happen with President Bush in 2000,” he said, referring to the president’s close election but bold moves once in the White House.

Seattle Times reporter David Postman contributed to this story.

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com