YAKIMA — The race for governor moved into high gear last night as Attorney General Christine Gregoire and former state Sen. Dino Rossi faced off for the first of three debates in a week.

Yesterday's event, before a crowd of about 1,000 in downtown Yakima's Capitol Theater, was the candidates' first and only debate east of the Cascades.

Fielding questions from the audience and reporters, Gregoire and Rossi both sought to capitalize on voter discontent and talked about moving government in a new direction.

Gregoire, the Democratic nominee, said she wants to "blow past the bureaucracy" and talked of bringing a culture change to the Department of Social and Health Services.

Rossi kept coming back to his answer to most of Washington's ailments — improving the state business climate. And he almost got the crowd to break the no-applause rule when he said he planned on "actually being governor of the whole state."

The most heated exchanges came over Rossi's role in writing the state budget two years ago, when the state was facing a record $2.7 billion deficit.

Gregoire criticized a proposal that Rossi, as budget chief in the Senate, put forward at the time to change eligibility for Medicaid, which would have left as many as 40,000 children off the program. Medicaid is a joint state-federal program that provides health insurance to low-income families.

Rossi's plan met stiff opposition and was never adopted. But Rossi said last night his proposal was what he termed "an Olympia cut" — a reduction in an overall increase. He said his budget still would have provided Medicaid coverage to 4,000 more kids than in the previous year.

The number of children on Medicaid actually has gone down significantly since the 2003-05 budget went into effect. The decline is mostly due to another change Rossi pushed in 2003 — tightening Medicaid-enrollment standards and requiring families to prove their eligibility every six months, instead of once a year.

Gregoire rapped Rossi for another piece of the Legislature's 2003 budget that suspended voter-mandated cost-of-living raises for teachers. Rossi said the plan first came from Democratic Gov. Gary Locke, and pointed out that his proposed budget had small raises for new teachers.

Rossi also vowed that, if elected, on his first day in office he would submit legislation to clamp down on liability lawsuits for medical malpractice. Rossi reiterated support for capping the amount that juries can award for noneconomic (or pain and suffering) damages.

Gregoire also promised liability-lawsuit reform. But she said damage caps would not solve anything. Instead, she called for penalizing lawyers who file frivolous claims and driving down insurance costs by luring more insurance companies to the state.

The candidates were asked what they would do to help local governments, especially in rural areas, still struggling to replace tax revenue lost in 1999 when voters slashed state car-tab fees by approving Initiative 695.

Gregoire said she does not favor raising state taxes but does support giving cities and counties more ability to raise the local taxes. Rossi again said the answer was improving the business climate to boost tax collections.

That also was the crux of Rossi's answer to helping the state's colleges and universities keep up with growing enrollment demand. Gregoire said one thing she would do is propose a new sliding-scale tuition system that would require wealthy families to pay more.

Rossi said he favors freezing annual increases to the state minimum wage during hard times. Gregoire said she opposes that, pointing out the minimum-wage law was approved by the voters.

As of this week, Gregoire had raised $5.3 million and Rossi $4.9 million.

The Republican Governors Association has reserved more than $1 million of airtime and has begun TV ads attacking Gregoire's record as attorney general. The Democratic Governors Association has sent $800,000 to the state Democratic Party, which gave $700,000 to Gregoire's campaign.