Corrected version

Gubernatorial candidates Rob McKenna and Jay Inslee are joining us at 1 p.m. Tuesday to seek our endorsement. We'll be live blogging the session here. Inslee is a former U.S. representative and McKenna is the state's attorney general.

1:04 p.m. Both candidates have arrived and were just seated.

1:05 p.m. First question from editorial page editor Kate Riley: If you are elected, how would you approach budget and policy given the permanent economic reset?

1:06 p.m. McKenna cites examples of cutting costs in the state AG's office. We have significantly fewer employees than we we started. "We've saved $25-$30 million over where we were at the peak of the budget four years ago," he said. He wants to take performance management to every state agency, including adding to collective bargaining. He also wants to bring competitive contracting, such as for IT, printing, maintenance. He also mentioned lean management practices, which King County is using.

1:08 p.m. Inslee says, "We want to weed out undergrowth of middle management." We need to stop erosion of educational funding, he said, and put it into health care budget. he wants to pursue aggressive preventative health care models. He also cites lean management practices from Boeing and Virginia Mason, as well as health care practices that King County. He said he's also focused on creating jobs.

1:11 p.m. Our publisher Frank Blethen asks: What will you do to address budget hole?

1:13 p.m. Inslee says we have to be more realistic about it. He circles back to job creation to jumpstart state revenue.

1:13 p.m. Blethen says I think you're getting off topic. Before getting to revenue, we have to talk about government reform.

1:14 p.m. Inslee repeats lean management practices. "I haven't been down there for seven years having tea with everyone," he said. Was that a reference to McKenna or Gregoire?

1;15 p.m. McKenna says we don't have to make same policy choices as in the past. "We aren't going to be able to fund cost of living adjustments for anybody in the next biennium," he said. He said problem is collectively bargained contracts get funded first. Health care is a part of it, he said, in bringing. "We are going to have fewer state employees," he said, through attrition and retirement.

1:18 p.m. Lynne Varner asks: Do you commit to increasing K-12 funding in the next two-year budget given the McCleary ruling on education from state Supreme Court?

1:19 p.m. McKenna wants to tie teacher performance and pay to student progress, he said. He wants to give power to schools to staff how they want to. Dollars should follow students and not the adults, he said. He wants to allow public charter schools. McCleary is about ample funding and where the funding comes from, he said. He wants to do a levy swap to reduce over-reliance on local levy funding. To come up with more money net, he says key is to limit growth rate of rest of government like population growth plus population, and take the excess and invest that in education.

1:21 p.m. Inslee says it's reform. We've got to eliminate achievement gap. He wants to end the seniority system making personnel decisions for our teachers. He said Legislature didn't go far enough in tying performance results to promotion and hiring. Inslee proposes a residency program for principles. He is considering the local levy swap.

1:23 p.m. Blethen asks for specifics on higher education.

1:24 p.m. Inslee says stop the slide, and there's no magic wand. He said we need to put people back to work. We need to save money to put it into education, he said. He suggests removing regulations on procurement system so they can get the best deal.

1:26 p.m. McKenna went back to his plan to constrain government spending to population growth and putting the excess into education. He doesn't want to put all that into the same system — UW, WSU. He wants to expand branch campuses because they produce degrees at a lower cost. Online should be a part of growing higher ed both remotely and on campuses, he said. He wants accountability from institutions and for them to produce graduates from high demand programs for tech companies.

1:30 p.m. Bruce Ramsey asks whether they think collective bargaining system is working or needs reform?

1:31 p.m. McKenna says he wants to bring the Legislature back in. He wants to bring legislative reps to the bargaining process. "You want a governor who sits across the table, not on the same side of the table" with the unions, he said. Unions have been able to pick people they negotiate with.

1:32 p.m. Inslee says he believes in independence and accountability. "Governor ought to be accountable for decisions made in collective bargaining," he said. The governor should not "be allowed to hide behind the Legislature," he said. "These legislators have shown a proclivity at times to cater to local interests and the like."

1:34 p.m. Varner follow up question: Would you support state-wide collective bargaining with school unions?

1:35 p.m. Inslee does not support moving away from local bargaining.

1:35 p.m. McKenna says as state implements McClearly ruling, state will need to step into more assertive role.

1:37 p.m. Ramsey asks how to change pension plan and whether it's needed?

1:38 p.m. Inslee says pension depends on compensation and the state budget and he would need to balance them both.

1:39 p.m. McKenna says we are running up against legal limits of how to change pension benefits for people already covered. For future hires, he wants to move employees to a hybrid plan.

1:41 p.m. Lance Dickie asks about their vision on transportation issues?

1:42 p.m. Inslee says he wants to keep moving forward on what we've committed to, such as light rail across Lake Washington. He gives priority to moving freight. He just mentioned lean management again. I'm starting to keep score on how often that's said today.

1:44 p.m. McKenna: "We're going to have to come out to voters with a package for funding transportation." He also wants to find public-private partnerships to fund projects. He gives Gregoire credit for moving SR 520 and the Alaskan Way Viaduct forward and says state does need to provide leadership. "You cannot allow local government to call the shots, you cannot allow Mike McGinn to stop the viaduct project...," he said.

1:49 p.m. I asked about where candidates differed from party. To McKenna, can you give us examples of actions you've taken that corporations have opposed?

1:55 p.m. McKenna says he has sued pharmaceutical companies and loan servicing companies. "I've sued my friends. I've sued the Washington state Republican party for PDC violations as I've sued Democrats." He also said calling for a transportation package which is something Republicans don't support.

1:56 p.m. I asked Inslee where he had taken votes that unions opposed. Inslee said, he has supported a number of trade agreements because Washington state is so trade dependent. He also said he is endorsed by Washington Education Association but he also wants tougher performance evaluations for teachers.

1:57 p.m. Dickie asks candidates what they're going to do if the Supreme Court repeals the Affordable Care Act.

1:58 p.m. McKenna says he supports implementing a health-care exchange.

1:59 p.m. Inslee says he wants to open periods of re-upping.

2:00 p.m. Lightning round.
Are you voting yes or no on Ref. 74 to repeal legalization of gay marriage? McKenna says no, Inslee says yes. (So McKenna is does not want gay marriage legalized, Inslee wants to keep gay marriage legal.)
Will you vote yes or no on Init. 502 to legalize marijuana? McKenna says no, Inslee says no.
Will you vote yes or no on Init. 1240 to allow charter schools? McKenna says yes, Inslee says no.
Do you support allowing insurance commissioners to consider revenue surpluses when considering rate increases for small group, individual plans? McKenna says yes, Inslee says further consideration.
Should Washington state require proof of legal residence (to be in the U.S.) before issuing a driver's license?
McKenna says yes, Inslee says essentially no. He would only require proof of state residence and identity verification.
Do you believe the state death tax is hurting our economy and job creation? McKenna says yes. Inslee says all taxes have onerous consequences.

2:12 p.m. Ramsey asks, do you support a state income tax?

2:13 p.m. McKenna says it's off the table.

2:13 p.m. Inslee says he is not proposing new taxes. He is saying no to income tax.

2:15 p.m. Blethen asks what are two or three biggest potential savings cuts?

2:16 p.m. Inslee says eliminate subsidies to fossil fuel industries could cut tens of millions of dollars.

2:21 p.m. McKenna says end sales tax exemption for companies like Amazon.

2:21 p.m. Dickie asks what's your position on coal trains moving through the state and coal ports being built in the Northwest?

2:22 p.m. Inslee says he looks at through a jobs lens. They do have some positive job potential but negative potential through transportation. He said need to evaluate cumulative impacts and look at each town that will be affected and how to mitigate.

2:23 p.m. McKenna says he wants to do a cumulative environmental impact study on coal trains, including transportation impact for trains that would otherwise come through to Canadian ports. He says if trains pass environmental and safety standards, he doesn't believe ideological opposition to coal burning should stop the projects.

2:27 p.m. Now McKenna is talking about the difference between different kinds of environmental impact studies.

2:28 p.m. Inslee says we need to look at cumulative impact of coal trains. "I have a concern if we elect governor who does not have a vision for job creation that includes clean tech," he said.

2:29 p.m. Closing statement time.

Inslee says we have something unique in Washington and that's the power of innovation. He says he has a vision that uses power of innovation to grow our state's economy, citing examples of solar panel companies. Another example is he wants to allow colleges to enter partnerships with small businesses.

McKenna says jobs are important and he and Inslee have different plans. We shouldn't be picking winners and losers in state government, he said. He says the problem is it's too expensive to do business in the state. He talks about his supporters, including groups that normally endorse Democrats, and he says he has operated in bipartisan way in Olympia.

2:33 p.m Endorsement meeting is over.

An earlier version of this post, published at 2 p.m., was corrected at 2:33 p.m. Jay Inslee said he would vote no on legalizing marijuana. The earlier version of this post said he would vote yes. An earlier version also incorrectly said the meeting would be held Wednesday.