Republican Dino Rossi took some early jabs at Gov. Christine Gregoire in their first debate Saturday night, saying the state's unemployment rate and a looming deficit prove that the incumbent has mismanaged the state.

Republican Dino Rossi took some early jabs at Gov. Christine Gregoire in their first debate Saturday night, saying the state’s unemployment rate and a looming deficit prove that the incumbent has mismanaged the state.

Gregoire sparred back, putting the blame squarely on the Bush administration and saying the state is better off than most.

Rossi said Gregoire presided over a 33 percent increase in the state budget, a spending increase he said was two times the increase in revenue, leaving the state facing a $3.2 billion budget shortfall in the next two-year fiscal period. “It’s not a revenue problem, it’s a spending problem,” he said.

Gregoire said she entered office facing a $2.2 billion deficit from the state budget drafted by Rossi when he was chairman of the Senate Ways and Means Committee, erased the red ink and established a rainy-day fund before the economic downturn began.

“No place in America has escaped the failed economic policies of the George W. Bush administration policies that my opponent has supported,” she said. “Today we’re one of the few states in America that has a surplus … .”

Both said they would not raise taxes but neither would give any specifics on how spending should be reduced to meet the anticipated shortfall.

Gregoire and Rossi moved their campaign from the airwaves to a live encounter before about 80 people at a local television studio.

The debate was one of six that will be held in the final weeks leading up to a rematch that is likely to be the most competitive governor’s race in the nation.

Gregoire beat Rossi four years ago by 133 votes after three vote counts and an unsuccessful Republican court challenge.

It’s already shaping up to be another close race. In the primary election last month, Gregoire finished less than 2 percentage points ahead of Rossi.

The two are dealing with tough financial news as they head into the final weeks before the election.

On Tuesday, officials announced that the state’s jobless rate jumped to 6 percent, the highest level in nearly four years, and that more than 200,000 were people unemployed and seeking work.

There was more bad news Thursday when the state’s revenue forecast dropped by $530 million, pushing a projected deficit in the next budget to about $3.2 billion.

The campaigns agreed beforehand on several topics for the debate, including education, the environment and transportation as well as tax and spending issues.