Yes Washington budget has a huge deficit

The fact checkers say Dino Rossi is correct: Christine Gregoire finishes her term as governor with the budget facing a deficit of over $3 billion. Fact checking Wash. gov's race: Budgets, taxes - MyNorthwest.com:

SHE SAYS: "Today, we sit on a surplus ... We have literal money in the bank. The projected - and I emphasize the word projected - deficit is for 2011." HE SAYS: "It's like having $800 in your checking account, and you owe over $4,000 come January - you're still over $3,000 upside down." THE TRUTH: Gregoire is cherry-picking the slice of truth that sounds best while pooh-poohing the bad part. Rossi is being more truthful - there's a deficit ahead, and the state's savings won't be enough to cover it. Gregoire grudgingly acknowledged some sort of future budget hole when the Legislature adjourned earlier this year. But she continued to answer questions about the deficit by saying the state had a surplus. Lately, she's 'fessed up a little more, but still emphasizes the deficit is not set in stone. That's technically true. The state's balance sheet shows a general fund surplus of about $87 million, with about $440 million in the Rainy Day Fund - a savings account for emergencies - through the 2007-2009 budget. So we do have "money in the bank." But for practical purposes, it's already spent. If she had to write a new budget for the 2009-2011 fiscal year right now, Gregoire would be facing a big deficit. That's because current state spending, if carried forward, would likely cost about $3.2 billion more than Washington is expected to have by the end of the 2011 fiscal year.

They also address claims of raising taxes and the balanced budget that Dino Rossi and ex-Governor Gay Locke put together.