Gov. Christine Gregoire proposed her final budget this week, with her plan for the 2013-15 budget focusing on how to fix a projected $1 billion shortfall for the next two years, and also how to meet the requirements of the State Supreme Court decision on education funding.

According to Gregoire’s office, the plan “relies on a mix of spending cuts, reform savings, fund shifts and revenue adjustments” to meet the monetary shortfall projected for 2013-15.

“My goal with this budget was to give our incoming governor and the Legislature a balanced and sustainable plan that addresses our fiscal problem and preserves services that are pivotal to our future prosperity,” the governor said in a statement. “Nothing will do more to ensure a bright future for our state than the many enhancements we are proposing throughout our education system.”

The governor’s office is required by law to create budget proposals based only on existing revenue streams. If Gregoire and her staff held only to that requirement, a number of severe cuts would have been included in the budget, including the closure of state parks, the elimination of the state’s food assistance program, reduction in funding to school districts, and $52 million in across-the-board cuts to public colleges and universities.

“We have cut billions of dollars in spending and made major reforms since the state of the Great Recession,” she said. “A budget that relies only on existing revenue would not only jeopardize essential services — I’m convinced it would hinder our economic recovery.”

In the proposed budget, the state is projected to save $20 million due to the creation of the Department of Enterprise Services in 2011, which merged five different departments into a single entity.

It’s also projected the state will save $140 million through Medicaid expansion efforts, which relates to the implementation of the Affordable Care Act. About $57 million is being saved through cuts to local governments, and over $360 million will be saved by suspending Initiative 732, which deals with annual cost-of-living adjustments for teachers.

On the revenue side, Gregoire is proposing the repeal of a fuel tax use exemption that would have cost the state a projected $63 million in the 2013-15 biennium. She also proposes the extension of the Hospital Safety Net Assessment, an inpatient fee that was created in 2010 and is expected to raise $276 million over the next two years.

The proposal does include some new spending, according to Gregoire’s office, with most of it directed toward education. $50 million is earmarked for increasing enrollment in the state’s early learning programs, while $20 million will be spent toward increasing STEM (science, technology, engineering and math) opportunities at public colleges and universities.

Along with this, Gregoire is proposing $19 million to help the state’s underfunded parks system.

Gregoire is also proposing $501 million toward projects aimed at cleaning up and protecting Puget Sound.

The governor plans on getting the ball rolling on funding education by making a $1 billion “down payment” for the 2013-15 budget.

Last year, the State Supreme Court decided that the state had not been meeting its constitutional requirement to fully fund education. In response, state lawmakers promised to increase state funding for basic education by $3.4 billion by 2017-19.

Gregoire plans to make the “down payment” by “proposing a wholesale excise tax on gasoline and diesel fuel that would gradually increase over the next three biennia to eventually fund the entire pupil transportation budget.”

By using those tax dollars, more money will be freed up from the state’s General Fund to cover the other costs associated with education.

She is also proposing the extension of two 2010 taxes, a business and occupation surcharge and a beer tax surcharge, to help generate funds for education. According to Gregoire’s office, the fuel tax would raise $367 million over the next two years, and the tax extensions would raise $636 million.

“My proposed budget offers both a solution to the current budget shortfall and a solid start on meeting our obligations under McCleary (the education court case),” she said. “This plan is a sensible, sustainable budget for Governor-elect Inslee and the Legislature to consider next month.”

Federal Way city spokesman Chris Carrel said the governor’s proposal is a first step in the right direction in getting the state and cities back on sound financial footing.

“Governor Gregoire’s budget proposal is a serious attempt to address some of the significant fiscal challenges the state continues to face,” he said. “What we don’t know is whether the incoming Governor Inslee, or the Legislature, will adopt any of those ideas on their own, as they grapple with the state budget during the 2013 legislative session.”

Carrell said the city will continue to push for the restoration of liquor excise tax funds, which in the past had put approximately $450,000 into the city’s coffers on an annual basis. Carrel also indicated the city will attempt to work with other Washington state cities, and the Legislature, to ensure that no further funding reductions are seen in the upcoming years.

Even with budgetary issues looming for all levels of government, Carrel said the city is in a good position to be represented in Olympia.

“Fortunately for the City of Federal Way and its residents, we are represented by an outstanding, informed leader in the Senate, with Senator (Tracey) Eide,” he said, “and our two new state representatives, Roger Freeman and Linda Kochmar, who are well-versed on city priorities from their service on the city council.”