Rossi ponders the future — his own, and the state's

In 2003, when Republican state Sen. Dino Rossi wrote the most frugal state budget in recent history, the economy was in a curdling hangover. State government revenues were 10 percent short of appetites. At a time of economic weakness, either taxes had to rise or the budget had to be cut. Rossi worked out most of the cuts, sparing a few vulnerable groups. It was a fine performance.

After narrowly losing the race for governor in 2004, Rossi has published a book, given speeches and set up the Forward Washington Foundation. By year end, he will decide whether to run in 2008.

Business conditions, however, have changed. The state's economy is in a sweat. The fast pace is not mainly Gov. Chris Gregoire's doing — or President George W. Bush's, either. Still, times are good. Frugality wants a new reason.

Rossi has two such reasons, one financial and one moral. Financially, in an up-and-down economy it is perilous for spending to follow revenue all the way up. Come the next recession, commitments made now will create a crisis moment, just as in 2003.

"We need a sustainable budget," Rossi says. "We're going to blow through the largest surplus the state has ever seen and turn it into a very large deficit."

His second reason is based on who he is: a guy raised at the edge of poverty, who made it in the self-driven world of real estate. Rossi believes people are self-made, and has a suspicion that too much free stuff is not good.

This year, for example, the Legislature opened up Medicaid to kids from families of four with an income as high as $62,500 a year. In many rural areas, more than half the kids now qualify for medical welfare. No other state in the Pacific Northwest does this. If we followed Oregon's policy, the cutoff would be an income of $38,550.

Rossi sees the Medicaid expansion as "a backwards way of having a single-payer system" and of spreading the welfare culture into the middle class. In health insurance, he prefers reducing government mandates, he says, "so you can decide what you need in your plan." He also would offer tax breaks for small business to provide health insurance.

Small business is Rossi's touchstone. When the Legislature declares mandatory family leave or mental-health coverage, all business pays but small business feels it personally.

Gregoire is also a pro-business governor, but in a different way. She often speaks as if she were the CEO of Washington Inc., an entity that needs to make big public investments to succeed against global competition. She started the Life Sciences Fund to provide seed money for biotech ventures.

Rossi doesn't believe in this. "It's not my job to pick winners and losers," he says. "If there's a return, the market will invest."

Rossi sees the governor's job as CEO of an entity, like a large dog, that tends to eat too much if not curbed. With state spending up by roughly one-third in four years — and no appreciable tax cuts — a time for frugality may be coming. Whether it arrives in 2008 is another matter; next year, we could be at the peak of a boom.

If he runs, Rossi needs to speak out soon on public questions, such as November's ballot measure in central Puget Sound to raise taxes on cars, property and sales in order to build roads and light rail. Big business wants it. Small business may not be so sure.

Rossi says he hasn't made up his mind, but his history is suggestive: In the 1990s, he campaigned against light rail.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His e-mail address is bramsey@seattletimes.com