Democrats unveil stimulus plan; Zarelli skeptical

State Senate Democrats unveiled an economic stimulus plan Tuesday that they say will create 25,000 jobs in Washington over the next two years.

The multi-pronged plan focuses on job creation in "green" industries, the health care sector and public works projects. It is designed to work in conjunction with a similar federal stimulus package proposed by President-elect Barack Obama.

"In recent months, I think we've all learned the hard way that we can't keep doing what we did in the past," said Sen. Jim Kastama, D-Puyallup, referring to the state's need to retool its workers for new jobs.

The plan includes:

-A call for the creation of a state entity to oversee the expansion of broadband and Internet service to rural areas. The expansion would be achieved either through the creation of a new state agency, or a state-chartered nonprofit corporation. If an agency were created, financing would come from fees collected by the agency. Public money and private contributions would pay for the expansion if the Legislature charters a nonprofit.

-A business and occupation tax credit for small companies with 10 to 15 employees that hire new workers.

-A sales tax exemption for the purchase of high-efficiency "green" construction materials used to retrofit buildings and homes.

-Streamlining the permit and regulatory process so that ready-to-go construction projects can get under way.

-Creating work-study programs to retrain unemployed workers. Democrats are keen on filling what they estimate to be nearly 12,000 job openings for nurses and health care workers.

However, Senate Democrats were vague on how the programs would be financed. Some money would come from local taxes, some would come from the state's general fund and a large portion of the needed financing would come from the federal stimulus package.

Lawmakers said they are waiting to see how much money the state will get in the federal stimulus package before providing more specifics.

Republicans say the plan does little to spur actual growth and will train workers for jobs that there is no demand for as of yet.

"Two things: what's this going to cost and how is this going to stimulate job creation?" asked Senate Republican budget chief Joe Zarelli, R-Ridgefield. "I'm a little confused as to how this is going to stimulate the private sector to invest in the economy."

Zarelli said the Democratic plan needs to focus on a stimulus package aimed at short-term economic growth. He said investing in future technologies was important in the long run, but an economic crisis was the wrong time to do that. Zarelli said he wanted to see additional short-term tax cuts for business owners.

But Democratic legislators who have been working on the stimulus say he's missing the point.

"We're particularly focused on this belt tightening and there's a natural tension here between economic theory" and what we need to do, said Rep. Larry Seaquist, D-Gig Harbor.

"If you're in a recession, you want government spending, but we're a state and we need to balance our budget. We've got the delicate problem of balancing the budget and finding ways we can boost spending."

Democratic members of the Senate say their stimulus package takes into account limitations imposed by the state's budget shortfall, which is estimated to be somewhere around $6 billion.

Senate Majority Leader Lisa Brown, D-Spokane, said the stimulus plan would mainly use streams of revenue that already exist. The exception, she said, was $1.3 million taken from the state's general fund to pay for the business and occupation tax credit.

Both the House and Gov. Chris Gregoire will present stimulus packages of their own later in the legislative session that began Monday. Gregoire is expected to release her plan on Thursday. The House is expected to release its plan later this month.