Gov. Chris Gregoire says she will not consider replacing the Alaskan Way Viaduct with a surface route.

Seattle mayoral candidate Mike McGinn wasn't mentioned by name, but the governor clearly had him in mind when she spoke to the Association of Washington Business on Tuesday. McGinn opposes plans to replace the viaduct with a tunnel to carry traffic through downtown. Instead, he supports a waterfront boulevard, more mass transit and improvements to Interstate 5.

"I'm going to respectfully disagree with this candidate. I'm going to say 'Been there, done that,' " Gregoire told a crowded conference hall at the AWB's annual policy summit held this week at the Suncadia Resort in Cle Elum.

The governor said the state has researched the options to death and concluded, "to go to a street option, which is the alternative that's being offered up ... you can shut down business in Seattle."

She argues a surface route also would snarl traffic on Interstate 5 for most of the day. "When they're trying to bring parts for the second (Boeing) 787 from Renton to Everett, when are they going to do it?"

Gregoire said the state Legislature, after much debate, has made up its mind to go with the tunnel. "It's done. We're moving forward," she said.

The governor also talked briefly about the state budget and what's conservatively estimated to be another $1 billion hole lawmakers will have to deal with next year.

As she did last session, Gregoire largely dismissed the prospect for any tax increase to help close the gap.

The governor wouldn't rule it out completely, but said "Tell me a tax that you're going to increase that will give you $1 billion that doesn't hurt business, hurt individuals, hurt our recovery."

The state she said will have to cut more from the budget, possibly eliminating entire programs such as the state's basic health plan, which provides subsidized insurance to the working poor.

"There's not a lot that isn't on the chopping block under these circumstances," Gregoire said.