Gov. Christine Gregoire, again citing the state’s fiscal crisis, targeted employee pension and health care costs for major spending cuts as she outlined for legislators Tuesday in her State of the State address the difficult budget they must balance during the legislative session this year.

However, she also emphasized her certainty that Washington state can recover from the current recession by comparing the state’s situation to the Great Depression.

Gregoire spoke about the more than 600 people who lived in “Hooverville” shantytowns around Seattle’s Pioneer Square during the Great Depression and how companies like Boeing, Nordstrom, and Weyerhaeuser survived the depression and went on to become Fortune 500 firms.

“These stories remind us that the people of Washington are resilient,” Gregoire said. “We have been through tough times before, and we emerged stronger than ever.”

Gregoire said her three-step plan is to first create a financially secure path for the future, then encourage everyone to recognize that the government can’t do it all, and finally transform Washington state government to be more effective.

“Let us go into this session with the clear knowledge that we have an opportunity … to be bold and help the people and businesses of Washington rebound and prosper,” Gregoire said.

In her speech the governor said the opportunity lies in controlling pensions and healthcare by making more cuts. In the past two years, health care costs have doubled to $5 billion and in the next two years pensions costs will double.

To manage these costs Gregoire proposed repealing a 1995 law that increased pensions for retirees, which would save the state $2 billion in the next four years. She also proposed a partnership with the Center of Innovation at the U.S. Department of Health and Human Services to save money on healthcare by keeping cost inflation under 4 percent.

She also suggested adopting a user-pays policy for services like state parks, so when a limited number of people use a service, they’re the only ones who have to pay.

Gregoire re-emphasized her plan to consolidate 21 state agencies into nine to save $20 million each biennium, while also creating a Department of Education agency to oversee education from preschool through college.

“Our students deserve it; our parents demand it,” she said.

For the future of the ferry system, Gregoire restated her intentions to create a regional ferry district.

“For those 23 million passengers each year, we must find a better way,” she said.

“We cannot leave here without a solution,” she said.

“If the Legislature in 1935 — in the midst of the Great Depression — could enact landmark change that has lasted for 80 years, then we, today, can also transform Washington State government,” Gregoire said.

After Gregoire’s State-of-the-State address, Republican legislators met to respond to to the governor’s speech.

“Last year she talked more in detail about the issues that she was going to deal with this session,” said Rep. Richard DeBolt, R-Chehalis. “Overall I thought it was very optimistic and I’m hoping that we do no longer have one-party control, but a system that works by including everyone in the discussion.”

Rep. Gary Alexander, R-Olympia, also responded to Gregoire’s speech.

“The governor has laid out some very bold and responsible proposals and the question is now, are we going to adopt those and move forward or are we going to find that they’re controversial enough to split us apart?” he said.

Janelle Kohnert is a reporter with the Washington Newspaper Publishers Association Olympia News Bureau