Gov. Christine Gregoire and challenger Dino Rossi both pledged Thursday night not to raise taxes to make up for the state's projected $3.2 billion budget shortfall. But even on that point of apparent agreement, the rivals found plenty of room for dispute.

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BLAINE — Gov. Christine Gregoire and challenger Dino Rossi both pledged Thursday not to raises taxes to make up for the state’s projected $3.2 billion budget shortfall.

But even on that point of apparent agreement, the rivals found plenty of room for dispute during a heated hourlong debate sponsored by a business group.

Rossi accused Gregoire of planning to raise taxes no matter what she says now. Gregoire, a Democrat, strongly denied that and said Republican Rossi himself had backed some tax increases while a budget writer in the state Legislature.

Each offered sharply different accounts of who is to blame for the state’s budget problems, with Gregoire boasting the state is among a few that actually has a budget “surplus” — referring to a “rainy-day fund” of more than $700 million she pushed for.

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Gregoire said she was better qualified to protect “the values of the state of Washington” while solving the state’s budget problems.

Rossi countered that Gregoire knew the state was headed for rough times, but increased the state budget by $8 billion over the past four years.

The debate, at the seaside Semiahmoo resort in Whatcom County near the Canadian border, was sponsored by the Association of Washington Business (AWB) and focused largely on business and tax issues.

It was especially friendly territory for Rossi, who was given an award by the AWB before the debate for his long support of business interests.

Rossi delivered a business-friendly message, saying he’d turn Washington into an “entrepreneurial state” and “change the culture” of state government by appointing business leaders to positions in Olympia. “Half of you have my cellphone anyway. Give me a call,” Rossi said.

Rossi attacked Gregoire from the start, listing dire economic statistics and a poll of CEOs who complained Washington is a comparatively poor place to do business.

“We have a $3.2 billion budget deficit, and you and I have a bull’s-eye on our backs because the incumbent is going to raise our taxes to solve that problem,” Rossi said.

Rossi accused Gregoire of running a campaign that glosses over the state’s problems by trying to blame President Bush for the state’s woes.

“We need to look in the mirror and solve some of our own problems right here in Washington state,” he said.

But Gregoire said linking Rossi to Bush is relevant because Washington voters don’t share Bush’s values. She demanded at one point that Rossi list three ways in which he disagreed with Bush. Rossi listed only one, saying he’d have vetoed more spending bills than the president.

Noting that Rossi had supported a tax on nursing-home beds while in the Legislature, Gregoire said his criticisms of her past tax increases were unfair.

“Yes, I raised the cigarette tax. I’ll raise the cigarette tax to go to education any day over seniors in nursing homes. The fact of the matter is that his priorities, his values are out of tune with the state of Washington,” Gregoire said.

Gregoire also disputed Rossi’s portrayal of the state as a poor place to do business, noting that Fortune and Forbes magazines have ranked Washington near the top for doing business.

She said in perhaps her clearest terms yet that she would not — despite Rossi’s claims — raise taxes to fix the state’s budget problems.

“I won’t raise taxes in tough economic times. We’re not going to be raising taxes,” she said.

In a brief interview after the debate, Gregoire said her no-tax pledge would include even specialized taxes, such as taxes on liquor and cigarettes, which the state raised a few years ago.

The candidates were asked questions on a number of topics, and while they often returned to their general talking points, they did offer clear differences on some of those issues.

For example, Rossi said he’d be willing to consider lowering the state’s minimum wage for younger, or entry-level workers, suggesting the state’s relatively high minimum wage might be denying teens a chance at first jobs.

Rossi said the minimum wage was not meant to be enough to raise a family on.

But Gregoire stood firm on the issue, saying there are “plenty of folks” raising families on the minimum wage. “I want to stand with them,” she said.

With the focus on taxes and the economy, other campaign issues were notable by their absence at the debate. Education, for example, which consumes roughly half the state budget, was mentioned only in passing.

And there was almost no talk about social issues, such as embryonic-stem-cell research, which Gregoire has been hammering Rossi on in recent campaign ads.

Jim Brunner: 206-515-5628 or

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