Gov. Christine Gregoire is facing her next leadership test: the state’s ongoing tax revolt. Tax cutters call the Democratic governor “Queen Christine,” and their latest weapon against her rule is Initiative 912, an effort to roll back the gas tax enacted by the Legislature this year with prodding by Gregoire.

The opponents of I-912 need direction. As the pro-912 campaign begins to gear up, there are serious doubts about the prudence of mounting an opposition effort at all. Even among those who want to fight, there is disagreement about how to proceed. Gregoire will be key to the debate, because she is the only one who has sufficient clout with the diverse coalition of business, labor, and environmental groups that supports and helped pass the $8.5 billion transportation package. All that desperately needed construction will be mostly funded by an incremental gas tax increase of 9.5 cents over the next four years. I-912 would gut the list of improvements.

The tax revolt flummoxed our previous chief exec, Gary Locke. He and legislative leaders watched helplessly as a watch salesperson from Mukilteo, Tim Eyman, ran up incredible victories with harebrained, unconstitutional ballot measures year after year that hamstrung government’s ability to make necessary public investments. In 1999, Initiative 695 slashed the motor vehicle excise tax (most of us call it “car tabs”). A judge tossed the initiative, but the Legislature cut the tax anyway. In 2000, by passing Initiative 722, voters embraced another unconstitutional measure—this one limiting the growth of property tax. Eyman hired a better lawyer the next year and wrote a constitutional measure, Initiative 747, which passed easily and now holds property tax increases to 1 percent annually—hampering local government’s ability to deliver needed services. In 2002, voters destroyed local government’s ability to maintain roads by passing Initiative 776, which cut counties’ vehicle licensing fees. Things quieted down for a couple of years because Eyman had problems identifying easy tax targets and following campaign finance rules. Pundits began speculating that perhaps the state’s anti-tax fever had broken.

They were wrong.

This year, despite her election woes, Gregoire showed genuine leadership by pushing hard and successfully to get the $8.5 billion transportation package through the Legislature. About $5.5 billion is raised by a 9.5-cent incremental increase in the gas tax, bringing the state revenue per gallon of fuel to 37.5 cents in 2008. The state constitution requires that gas taxes fund only highways and the Washington State Ferries, which are considered highways of the sea—not mass transit. Other revenue sources in the package include fees on driver licenses, motor homes, vehicle license plates, and the weight of certain vehicles.

The new transportation taxes will pay for 274 projects around the state. The most important investments are in 30 structures that are at risk of collapse, including $2 billion for the Alaskan Way Viaduct along Seattle’s waterfront and $500 million for the state Route 520 Evergreen Point Floating Bridge connecting Seattle and Bellevue. Next in importance are 106 safety projects to improve highways with high accident rates. The package also includes passenger rail transportation, environmental projects, freight mobility, and congestion relief. These are necessary investments in state infrastructure. That is why Republicans, Democrats, corporate execs, labor leaders, and environmentalists support them.

A couple of guys on KVI-AM (570), Seattle’s main right-wing talk-radio station, don’t like the gas tax increase. Hosts John Carlson and Kirby Wilbur decided to try to repeal it using the initiative process. They had 30 days, relatively little money, a Web site, a bunch of volunteers, and a smart GOP political consultant, Brett Bader. But nobody thought they could gather enough signatures in time. Even Eyman didn’t. Bader says the campaign collected more than 500,000 signatures in just over a month.

The tax revolt is alive and well. Gov. Gregoire’s legislative director, Marty Brown, sums up the public mood: “We want to have improvements, but we don’t want to pay for them.”

Contrary to popular wisdom, the tax revolt is not confined to the rural areas of Eastern Washington. Tax-cut fever rages throughout Western Washington, too. Eyman’s successful initiatives have all won in Pierce, Snohomish, and Clark counties.

If Gregoire cannot figure out how to address the tax revolt, the state cannot move forward with necessary transportation investment. Not only will the economy suffer, people might get killed when the viaduct collapses. Politically, if Gregoire can’t figure out how to take on the tax cutters, she cannot govern as a Democrat. She will end up either helpless or Republican lite, as Locke did in 2003 with a no-new-taxes budget.

So what should the governor do? Her first task should be to persuade the businesses that oppose I-912 to fund a campaign against it. Right now there is no official opposition. Instead, a group of opponents that includes Boeing, Microsoft, Pemco, Vulcan, Washington Mutual, Puget Sound Energy, the Association of General Contractors of Washington, the Washington State Labor Council, the Washington Conservation Voters, and others has commissioned a statewide poll to find out what the voters think about I-912 and transportation.

Last week, another business alliance, including members of the Greater Seattle Chamber of Commerce and the Downtown Seattle Association, released a poll that focused on Seattle voters and the monorail debacle, but it had important implications for I-912. To defeat the measure, campaigners figure they need a “no” vote of around 70 percent in Seattle. There was fear among I-912 opponents that Seattle voters were so disgusted with the meltdown of the monorail that they would express their anger by voting in favor of repealing the gas tax. But the survey showed that while Seattle voters want to kill the monorail, they still support the statewide gas tax increase, 68 percent to 13 percent, with 19 percent undecided. Nationally renowned pollster Peter Hart, whose firm performed the survey, says this is very strong support. “The voters are willing to look ahead in such a progressive way on transportation,” he says.

That 68 percent of Seattleites, however, is not rock solid. Only 57 percent said they would definitely vote to keep the gas tax increase, while 11 percent said they probably would. So that’s not likely to calm the nerves of those who fought for the transportation package. State House Transportation Committee Chair Ed Murray, D-Seattle, says the business community seems skittish about actively fighting I-912. “It’s not clear to me yet to what extent they plan to play. It is possible they won’t put a lot of money into it.” Steve Leahy, president and CEO of the chamber, agrees there is anxiety. “They don’t plan on spending $4 million unless they feel they have some chance of winning,” Leahy says of an anti-912 campaign.

Political consultant John Wyble of Moxie Media says that only Gregoire has the clout to push businesses to fund an anti-912 campaign and ensure that the broad coalition of opponents stays together. “It’s such a weird group of people who are opposed to this,” says Wyble. “The only person who could make them work together is the governor.” Don Hopps, the director of the Institute for Washington’s Future, a progressive think tank, says Gregoire is terrific at this sort of backroom arm-twisting: “She has the proven capacity when it gets into the infighting.”

There is a great deal more debate about whether the governor should confine her role to power broker, or if she should also speak publicly and forcefully. Says Republican Randy Pepple, CEO of Rockey Hill & Knowlton, a public relations firm: “She is going to have to go with the bully pulpit.” Pepple says Gregoire should throw down the gauntlet to his friend John Carlson and ask him, “‘John Carlson, would you drive on 520 in a storm? Would you want your wife and children to?’ If not, why? If we don’t do something, we are going to have a tragedy on our hands.”

Others think Gregoire should stay behind the scenes. Says political consultant Martin “Jamie” Durkan Jr., “She’s a lightning rod. The voters want to kick the governor in the balls.”

The chamber’s Leahy says Gregoire has already made up her mind to be out-front. “She plans to be very involved and very vocal in a way that Gary Locke never was in eight years.” Washington Conservation Voters lobbyist Cliff Traisman says, however, that Gregoire knows she cannot be the face of the campaign against the initiative. “She is going to be strategic about it,” he says.

There also is considerable debate about what kind of campaign to run against I-912. Some believe the current political environment means it should be a grassroots, decentralized, get-out-the-vote effort. Transportation Choices Coalition Executive Director Peter Hurley says, “People need to hear the message not from a TV advertisement but from their local chamber, their PTA, and their circle of friends.” Hurley says it was a grassroots approach that helped defeat Eyman’s anti-transit Initiative 745 in 2000. He’s worried that the I-912 opponents will opt for a traditional television campaign. “If you do a paid media campaign, it looks like big money. People don’t trust big government and big business.”

Public affairs consultant Bob Gogerty, chairman of Gogerty Stark Marriott, disagrees. “Puget Sound is going to need an air war,” Gogerty says. “You have to reach people and let them know that this is about more than the gas tax.” Gogerty, whose firm directed the strategy for successful tax campaigns on behalf of Sound Transit and to build Qwest Field, says an anti-912 campaign has to present a positive vision of the future, appealing to voters’ hope about the state’s potential. “I don’t know how you do that without television.”

The chamber’s Leahy says many businesspeople were impressed by a successful campaign to renew a sales tax for transportation in San Diego County, Calif.: “They did 22 different, geographically targeted mail pieces. They swear by this direct mail rather than a hugely expensive, one-size-fits-all radio and TV campaign. That’s likely what we’ll attempt here.”

Moxie Media’s Wyble says Gregoire can’t see the fight against I-912 just in terms of winning or losing this particular campaign. Rather, this is an opportunity for the governor to start a conversation with the voters. “This is a long-term battle. We have to decide as a state what services we want to pay for.” Wyble thinks Gregoire has to take back ground that has been yielded to reflexive tax cutters, asking the voters: “Are you with right-wing talk radio? Or are you a commonsense person who wants the state to work?”

ghowland@seattleweekly.com