(We recorded both parts of the governor’s visit on video & will add here in their entirety when uploaded)

2:29 PM: “Speak your mind, and speak up!” South Seattle Community College‘s communications director Candace Oehler exhorted a room full of students just before Governor Chris Gregoire entered a moment ago. She is here to talk about her supplemental budget – which is not a pretty picture for education around the state, including post-secondary. We’ll be covering this as it happens. (Added: Video of what she said in the classroom, unedited, in its entirety:)

“Anything you say to me is important,” the governor herself told them moments afterward. “I can’t tell you how many countless hours I have put in … digesting a state budget as complex as ours during the worst economic crisis since the Great Depression.” She’s explaining to them first that most of the budget is “off-limits” – $8.7 billion out of $30 billion to solve the budget gap. “There are really only four places in state government where you can cut,” she says, and asks if the students know where. “Higher education” is the first answer. “Social services,” the next. Then, “public safety.” Someone offers “Transportation” – but that’s off-limits, she says. “Health care” finally emerges as the fourth. It’s a shame, she says, since graduation rates are up, schools are full – including ones like SSCC where people can get training — and this is a time when optimally, in a recession, we should be investing in that, she says.

2:37 PM: She also talks about cutting health care – where already there have been cuts, with the Basic Health Plan now at less than half the enrollment of just a few years ago. She then explains that what she calls an “F-minus failure by Congress” hit the state “like a ton of bricks” in August, with “an immediate $1.4 billion shortfall” – and “they’re doing it to us again … but this time we’re a little more resilient.” This comes as positive economic signs have emerged, she says, in fields such as aerospaces, life sciences, and energy, in our state. But small business is struggling, she says, because it relies on consumer confidence – which just isn’t there. “Now we’re waiting to see what’s in Europe – if Greece defaults, Italy defaults, triggering a banking crisis in Europe,” that will be a crisis here, with possibly another $2 billion shortfall.

Now she moves on to what she sees as a budget solution – raising taxes. “Some will tell you this is not the time” to do that, she says, but “I can’t stomach (the budget) cuts.” She says she is upset about the prospect of having to cut school years, and release prisoners early. “I can’t see letting folks out and not supervising them, to include sex predators,” she says. And she says she doesn’t want to cut long-term care. Overall, she says, she’s looked at “185 revenue options,” including “tax loopholes,” while realizing “there’s an argument not to cut, for every one of them.” She said she saw the tax proposal as the only way to “stand up to the problem” – and thinks she might be the first in history to send a bill to the Legislature asking them to “take it to the people.” She notes that the sales tax hasn’t been raised in the state since 1983. State taxes take a lower share of your income than they did back then, and yet, no other levels of government “is doing our job,” she says, talking about how she plans to campaign for the sales-tax increase next spring.

2:47 PM: Now, questions from the students: “How are you telling people in Olympia who might be saying ‘we’re not going to raise taxes’ about the impact on students, and others?” she was asked, beginning her reply “We’ve already cut (more than $10 billion). … We’re in an election year and we’re going to hear a lot of election rhetoric. … (Candidates) will say ‘Surely there’s a better way, another revenue source’ … So what you’re going to hear in the coming weeks is that we need more recreational gaming, gambling, off the (reservations).” Others, she says, will suggest a capital-gains tax. But that will require building an infrastructure at the Department of Revenue, which’ll take a couple of years, she says – “I don’t have the time.” She says basically any counterproposal you can throw at her, she’s thought of. And she slings a few angry words at “the other Washington,” saying “they’re putting partisan politics above the good of the public.”

Next question isn’t clearly audible but brings her to discussing higher education – “It’s (one of the few places in the budget) where there’s a way to raise revenue” – tuition increases. However, she says, that’s not feasible any more – “We can’t make it so that only the affluent can afford to go to college in Washington state.”

Back to the sales tax: “This idea that if you raise it a half-cent you’ll lose all these jobs … Guess which state raised it a penny a year ago? Arizona! They haven’t lost a boatload of jobs.” The governor goes on to say, “We’re unique! … Who’s our #1 trading partner? China! … You’re competing against students sitting in a classroom today in China, and Japan, and Korea. That’s who you’re going to compete with. With all due respect, they’re not cutting their budgets. They’re not cutting education, they’re investing in education. … Cutting the dickens out of education is not in your best interests and not in the state’s.” In response to a question from a student that was more a statement in support, she observed the problem with much of today’s unemployment – even when the economy recovers, many of today’s lost jobs won’t exist any longer, due to automation, efficiencies, and other factors. Hiring right now is depressed for reasons, she says, including – as a student answered her question – a lack of capital, because the banks aren’t making it available. “They’re real jittery about what’s going on in Europe … They’re sitting on no less than $2 trillion in cash.”

3:01 PM: How many would vote for raising more revenue than the $500 million she proposed? asks the governor. Most students in the room raise their hands. “I gotta try … (it’s) my best shot, and I don’t know if I’m gonna win,” she says. Shortly afterward, one student suggests that an income tax would be the solution. She reminds him that voters said no to the “income tax for higher-income individuals” proposal just last year. She also notes, though, that ours is one of only six states without an income tax, and has an “antiquated tax system.” She says ours is a “1935 tax system based on manufacturing.” Now she’s wrapping up: “We’re going to get out of this recession,” she promises. (is going to take media questions in a separate room next – we’re off to that.)

POSTSCRIPT: Community-colleges system chancellor (and former SSCC president) Jill Wakefield was on hand too, seen above with SSCC president Gary Oertli. Will add the video of the governor’s brief meeting with media.