Leadership has arrived.

Chris Gregoire is a much better governor than the last one we had. Her new budget is responsible, forward-looking, and on point. There has been some whining in the press about the general absence of strong leadership among Democrats. They aren't talking about this state's governor.

I haven't gone through the whole budget document yet, but it looks to me like she's picking up where she left off last session. If politics is the art of the possible, she's a great politician, because she got everything possible out of that legislature. She took revenue where it was politically feasible and funded the class size and teacher COLA initiatives. That was the right thing to do, for the voters, for the teachers, for the kids, and to set up the next advances.

I don't want to say, "Shame on Gary Locke for not doing that," but I do want to say there is new strength and purpose now sitting in the Governor's mansion.

The new budget is responsible. Of an anticipated $1.4 billion surplus, almost $600 million goes into reserve accounts for pension, health care and education costs. Over $300 million goes to more and less restricted reserve accounts. An additional $38 plus million goes to help high schoolers graduate. The budget creates a cabinet-level Department of Early Learning. This, plus the attention to health care and the action on transportation from last session demonstrates she is sticking to the core missions of state government.

The "strong economy" which generated these numbers was tardy in arriving (three years into the "recovery") and is based on housing construction, which feeds the revenue stream pretty good. The governor's caution in spending the surplus is well-placed, because it may not happen, and if it does, it could well be followed by a large popping sound. (housing permits were up 18% in 2005. Next year, even the Forecast Council's optimistic forecast is for only a 2.5% rise. Pessimistic, a drop of nearly 15%.) Add to this the fact that the revenue architecture itself is structurally inadequate to the foreseeable demands, and caution is definitely called for.

The biodiesel project got a lot of ink, and it's a good concept economically. It substitutes Washington-made product for Alaska-made product. I understand it is not an environmental program, since the same greenhouse gases are produced, but it should be good economically for Eastern Washington. A better plan economically and environmentally would be to expand and develop rail capacity, substituting efficient infrastructure for oil.

Cleaning up Puget Sound. What a concept. This is a leadership move, mobilizing pride and conscience to do what citizens know is right. Gregoire seems to have her ducks in a row on the plan. It's something that could generate a culture of environmental responsibility. Inspiring.

Comment: This is government cleaning up after private property owners and commercial enterprises. If the market were working right, the costs of this clean-up would have been generated by the actors who caused the problem, but the market doesn't work so good that way. The market transactions are long over with, the cash is in someone else's hand, and the government has to come along and pick up the tab. Who do you think whines most about taxes? Business and property owners.

A similar situation exists on a much larger scale with the burning of fossil fuels. Climate change and pollution mitigation costs will be enormous. But the transaction includes nothing for that. The price of a gallon of gas pays Exxon for the extraction, refining and distribution and pays the government for building roads. The easily anticipated and tremendous environmental costs completely escape the market transaction. If they were included, gas would be as expensive as it is in Europe, but the market would function. Otherwise we are simply subsidizing destructive activities.

I'm not sure about the Life Sciences Discovery Fund. It sounds a little like picking winners and losers. I haven't read the details, but the more it benefits existing state-operated research and facilities and the less it gives tax breaks to the sexy industry du jour, the more I will like it.