ER, FC.

The state's Economic and Revenue Forecast Council will meet later this morning to peer into the crystal ball and forecast the state of the state's treasury over the next two years.

Looking at the headlines over the past several days (Wamu? Hello?), it's hard to imagine anyone thinking the news might be good. And the state's already facing an estimated $2.7 billion shortfall over the next two years.

Gov. Chris Gregoire has spent much of the spring and summer disputing that number and stressing that Washington's fundamentals -- like foreclosure rates -- were way better than in other parts of the country. But this week, as major investment banks and other financial titans struggled to avoid becoming dominoes, Gregoire instead turned her focus on George Bush and on her Republican challenger, Dino Rossi.

"Americans cannot afford four more years of this in the White House and Washington state cannot afford a Bush Republican, like my opponent, bringing those policies to our state," Gregoire said in a statement sent out by her campaign. "...The failure to police Wall Street by Bush and the Republican leadership in Washington D.C. has put our country in this situation."

Republicans, meanwhile, continued to churn out press releases, the essence being something along the lines of "things here suck. Really."

"Our state is headed for a budget train wreck and Christine Gregiore is driving with her eyes closed because she can't bear to look at the mess she's created," said state GOP chairman Luke Esser. He pooh-poohs recent attempts by Gregoire to tighten spending now, such as a call for state agencies and colleges to freeze most hiring, conserve fuel and put off new purchases.

Meanwhile, groups like the private, liberal-leaning Washington State Budget and Policy Center are left to propose changes for how to address the budget shortfall. (Look for a white paper on the topic next week.) One recent idea that's been floated: a "high-incomes tax" -- which a large percentage of the state wouldn't have to pay -- that would allow the state to reduce some existing property or sales taxes.

Stay tuned.

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