Consensus Rule Is Aim of Washington State's Governor-Elect

Observers see parallels between his plans and Bill Clinton's on taxes and economy

THE transition team is hard at work preparing for an important "first 100 days." Task forces are being convened with representatives from all sides of knotty issues. The incoming chief executive is trying to make good on the image he set forth in the election campaign, which balanced Democratic Party principles with the need to revive a lagging economy.

But the man is not President-elect Clinton and the seat of power is not Washington, D.C., but Washington State.

Governor-elect Mike Lowry (D), like Mr. Clinton, has won cautious praise from many in the business community for his efforts at "consensus government." This is one of several interesting parallels between these two winners of November's election.

By considering moderate Republicans for some key posts and seeking views from many task forces, Mr. Lowry is "actively operating in this transition period as he campaigned," says Bill Jacobs, executive director of the Washington Forest Protection Association, sponsored by the timber industry. Lowry plans to consult a diverse "citizen's cabinet" throughout his tenure.

"It's very difficult to get consensus," Mr. Jacobs says.

Like Lowry with his task forces, Clinton will face this challenge when he holds his "economic summit." Lowry, however, has an advantage: State law requires that the budget be balanced.

A former congressman and Seattle University teacher, Lowry has a particularly difficult budget in the works. Although this state weathered the recession better than most, its economy is now fragile, with thousands of jobs in aerospace and timber lost or at risk due to industry troubles and environmental concerns.

State revenues, which have grown at an average annual rate of 22 percent for 30 years, are projected to grow at only a 9 percent rate during the coming two-year budget cycle. A $1.6 billion deficit is projected for the 1993-95 budget, assuming that salaries and programs are indexed to inflation, says Len McComb, director of Washington's Office of Financial Management. Revenues have been stagnating because high-paying industrial jobs have been lost and replaced by lower-paying service jobs, Mr. McComb say s. Average wages, after inflation, were about $1,600 lower in 1990 than in 1980. Meanwhile, key costs are rising: health care, social services, and education - with the state's public school system growing by 200,000 students between 1985 and 1995.

"It's just going to be a very difficult session," says state Rep. Gary Locke (D) of Seattle, who chairs the House appropriations committee. "We're definitely going to need a combination of both cuts [in spending] and tax or fee increases."

Lowry said recently that he will seek to trim spending by as much as $800 million, but that he will not make cuts that hamper programs critical to the state's future, such as education.

For revenues, he has floated the idea of a tax on interest income above $50,000 dollars (the state has no income tax) and expanding the sales tax to include such service industries as law and accounting. The plan parallels Clinton's goal of raising taxes on the rich and, McComb says, such a move makes sense, given the rise in incomes for wealthier Americans.

Lowry will enjoy a Democratic majority in both houses, something current Gov. Booth Gardner (D) does not have. But Lowry, like Clinton, will not necessarily have a free hand implementing policies. The sales tax on services "will be very hard to do," McComb predicts. Governor Gardner failed in 1987 to get that proposal passed. Yet, despite the lobbying strength of the affected industries, the climate for passage is better now, because "the clear alternative is increasing the sales tax for everybody."

Likewise with the interest-income tax: It would hurt the state's struggling job king, Boeing, which earns income on its huge cash reserves. But McComb says the tax would be "fair" and would simply extend a levy that already covers banks.