Gov. Chris Gregoire, in one of her last major acts as governor, has unveiled a $34 billion, two-year budget for state government, along with a tax package devoted largely to upgrading the K-12 budget.

The Democratic governor, leaving office in January after serving eight years, laid out spending priorities for every sector of state government, including schools and colleges, parks, social and health services, prisons, the courts and Legislature, Puget Sound cleanup, and the departments of government.  She also released transportation and construction budgets.

Easily the most controversial aspect of her budget rollout was her prescription of a billion-dollar revenue package, including a wholesale fuel tax and extension of a business tax on selected professional services, a hospital tax and a junk food tax. Reaction from Republican budgetwriters was mostly of the “dead on arrival” variety.

Democratic Gov.-elect Jay Inslee‘s office put out a noncommittal statement. He campaigned against new taxes this year.

The Gregoire budget would continue to squeeze some programs, including the State Library and the Heritage Center account, but would beef up other areas, including employee salaries, Puget Sound cleanup, parks and, most significantly, education. The Legislature and future governors are on notice from the state Supreme Court that the state has not been meeting the state Constitution’s requirement of ample funding of schools.

While it is a lame duck’s budget, it is nonetheless influential, setting the basic parameters of the budget-and-tax deliberations that await when lawmakers convene Jan. 14. Inslee is inaugurated on Jan. 16, and is not expected to build a ground-up budget proposal of his own. If history is a guide, he will present an amended version of Gregoire’s budget, and will have to deal with whether to include new revenue, such as a ballot referendum for education and/or for transportation.

Both houses of the Legislature will offer their own drafts. The House has a Democratic majority. The Senate has a slim Democratic majority of elected senators, but two of their fiscal conservatives, Rodney Tom and Tim Sheldon, have said they will cross the aisle to form a coalition with the 23 Republicans, seizing control of the upper chamber. Tom would be the new majority leader and Sheldon the president pro tempore.  Democrats on Monday rejected a call for a certain amount of power-sharing and counter-proposed a straight sharing of all leadership and committee posts.