Governor Gregoire has signed a new budget for Washington state, but warns that we aren’t out of the woods yet.

The Democratic governor signed the $31 billion spending roadmap Tuesday. Combined with a package of tax increases, the major budget revisions address a $2.8 billion gap that developed as the economy deteriorated after the 2009 legislative session.  A variety of taxes, including an additional $1-a-pack on smokes, taxes on bottled water and candy, and higher business taxes on some services, are taking effect quickly, although some rollback initiatives have been filed.

Lawmakers also approved a state employee furlough bill, and hundreds of employees will be laid off and out-of-state travel largely eliminated.  Voter-approved education initiatives and other spending is being curtailed.

Gregoire called the finance plan “a fair mix of cuts and revenues that ensures our most vulnerable receive the services they need, our young learners get the education required to be successful and productive, and our communities remain safe and protected.”

Her office describes the math this way:

“Overall, the state’s $2.8 billion deficit was filled by a combination of $747 million in cuts, $618 million in federal funding and $757 million in new revenue. This is on top of actions the state took to solve the $9 billion shortfall the state faced last year, which included $4.4 billion in cuts.”

The budget-and-tax decisions by the majority Democrats are expected to be a big debate topic on the campaign trail this fall. All 98 House seats are on the ballot, as are 25 Senate positions. Democrats currently have a 61-37 supermajority in the House and a big 31-18 edge in the Senate.   Democrats are defending their decisions as necessary choices, but Republicans say Democrats are badly overspent and that tax hikes are the last thing the state needs when the recovery is so shaky.