The June fundraising numbers are in, and if that's all there was to the governor's race, it would be no contest. King County Executive Ron Sims continues to collect pennies off the sidewalk relative to Chris Gregoire's ever-dispensing cash machine.

The attorney general pulled in a hefty $486,000 during the month, about five times the $97,000 Sims raised. More importantly, Gregoire cut her campaign outflows significantly, allowing her to bank a healthy $300,000 for the month and pushing her overall cash on hand over the $1.5 million mark. Sims, by contrast, ferreted away a paltry $9,000 for the month, leaving his cash total under $650,000.

But for a guy who is having trouble raising money and is trailing in his bid to become Washington State's next governor, Sims is sounding surprisingly upbeat about his chances. "Gregoire is out there without a parachute," he contends with a smile. "Where is she going to go?"

Is this confidence an indication that the man from Spokane is swilling too much of the house Chardonnay these days? Could be. Then again, given that his campaign difficulties are at least partially offset by the positive reception garnered by his top-to-bottom plan to revamp the tax code, and with some indications that the race is closer than people realize, Sims may have reason to be smiling.

The conventional wisdom in Washington State is that a politician is better off shooting himself in the head than admitting his support for an income tax. But Sims says he is buoyed by two May 27 focus groups of mostly undecided Democrats that showed such voters ranking progressive tax reform as the most important issue facing the state (in tandem with the economy). Participants said they admired the "backbone" and "guts" of candidates willing to push for a more fair tax system.

"It's not like I dived in these cold waters with enthusiasm," Sims admits about his counterintuitive strategy of advocating an idea other politicians have avoided like the plague. "[But] I was already in deep water swimming with the sharks." The details of the Sims plan, which will include a sales-tax reduction, replacing the B&O tax on grosses with a corporate-profits tax, and a hefty property-tax exemption, will be announced August 4, but have already drawn positive editorials in the Seattle Post-Intelligencer, the Olympian, and other newspapers.

Meanwhile, Gregoire, who is running largely on her resumé--particularly her lead role in negotiating the national tobacco settlement--rather than on any bold, substantive vision for change, has not impressed outside observers. National Journal's Hotline, a subscription service for political insiders, recently described her campaign as "underwhelming."

And that was before Gregoire finally cut her losses and settled the high-profile Capps lawsuit. Laura Capps, a former assistant attorney general, claimed she had been unfairly scapegoated and fired for failing to file a timely appeal against a $17.8 million judgment against the state. She sued, and her case, slated for trial this month, had already generated a boatload of bad publicity for Gregoire.

A few months ago, for instance, the Seattle Times discovered that a supposedly independent, outside review of the AG's office ordered by Gregoire in the aftermath of the botched appeal had been influenced, if not outright manipulated, by Gregoire aides in an effort to amp up Capps' culpability and minimize broader managerial failures in the office.

With the trial looming, Gregoire caved. The bottom line? Capps gets $195,000 and a new state job with guaranteed pay raises for three years, and her lawyers get a $100,000 payout. Gregoire campaign manager Tim Zenk described the settlement in a prepared statement as "a tremendous boost" for the campaign, which is true in the sense that the only thing worse for Gregoire than settling the case was not settling the case, which would have generated two weeks of relentlessly negative headlines for the AG.

With the tax boost and the Gregoire flub, Sims says he senses a shift of momentum. Afton Swift, campaign manager for Republican Dino Rossi, agrees, saying his campaign's private polling shows that while Sims trails Gregoire by almost 20 points among all voters, among the most likely Democratic voters, the AG's lead shrinks to a mere 6 points.

That's significant given that the new, party-oriented primary system is likely to depress turnout from less-partisan voters, though no one knows for sure by how much. But if, as the Sims camp believes, this primary race is decided by well-informed partisan Democrats, Gregoire is in trouble.