Oregon Public Broadcasting

Washington Governor Chris Gregoire has changed her tune about whether the state is facing a budget shortfall.

The Governor’s latest comments come amid the Wall Street meltdown and yet another gloomy state revenue forecast. Olympia correspondent Austin Jenkins reports.

Gregoire is in a tight re-election race with Republican challenger Dino Rossi. For months, the Democrat has refused to acknowledge the possibility of a major budget deficit.

Instead she’s pointed out the state currently has a budget surplus – which is technically true. But now Gregoire concedes there’s red on the near horizon.

Chris Gregoire: “Well, as we draw closer to the time where I need to do the budget, it’s just to me very clear that we cannot avoid a deficit. Now how much it might be, I don’t have any idea.”

The Senate budget committee pegs the deficit at $3.2 billion. Gregoire has ordered her budget chief to immediately find $200 million in savings in the current state budget. But neither she nor Rossi will offer specifics on what cuts they might make to the next two-year budget.

Gregoire also hopes the budget situation will turnaround if consumer confidence improves in the coming months.