Can Gov. Kate Brown build a coalition?
When Gov. Kate Brown picked up a pen to sign minimum wage legislation on March 2 of this year, just one year after she took office, in some quarters it was seen as a triumph. The new law keeps Oregon in the select group of states with the highest minimums nationwide. And in a concession to nonurban economies, the legislation allows more rural state counties to bump up to only $12.50 per hour by 2022 while Portland and other cities reach $14.75.
The wage hikes aid Brown in shaping a progressive gubernatorial legacy. But it is also emblematic of the challenges she faces as she passes her one-year milestone, after being thrust into office when former Governor John Kitzhaber resigned. That’s because the scheduled increases are widely seen by the business community as negative for job creation and for long-term economic development. Business leaders are also worried that passage of this law shows Brown may be too focused on labor issues to really listen and attend to their needs.
“I do think she reached out somewhat over minimum wage,” says Jeanne Staton, president of Eugene-based Staton Companies and a board member of Associated Oregon Industries. “Yet, actually, a lot of the collaboration she claimed was still just insider baseball, with the people at the table all prearranged.”
The charge of “insider baseball” echoes through many business leaders’ perceptions of Brown, especially as a battle begins to brew over a citizen-led initiative to tax corporations. Although the governor, 55, took office because of Kitzhaber’s implosion, insiders have long known her ambition stretched toward Oregon’s highest political office. She has declared her intention to stay in office, and the poll numbers point to a near certain re-election this year.
Nevertheless, many wish she would be more aggressive about laying out a lofty vision — and expect her to palpably demonstrate bipartisan leadership by creating a bigger table with a wider spectrum of stakeholders.
“Minimum wage would have been the perfect practice ground for showing that kind of leadership,” says Jim Moore, director of the Tom McCall Center for Policy Innovation at Pacific University. “It doesn’t have a big impact, but symbolically it is gigantic. She could have practiced her negotiation skills and show she has the chops.”
Here are her strengths,” says Ryan Deckert, executive director of the Oregon Business Association. “She’s approachable and high energy, and that’s infectious.” But, he continues, “she’s got to match her strengths with a big picture. I think she needs to find the political ‘middle’ and show the ability to drive a big economic and educational agenda.”
In early April, Brown delivered what one might call a big-picture address: a State of the State speech to the Portland City Club. There she affirmed her commitment to small business and cited a raft of achievements, not all of which business would deem friendly: Ban the Box legislation barring employers from enquiring about criminal history on job applications; legislation putting an end to coal energy in Oregon and a new Renewable Portfolio Standard; minimum wage; Motor Voter implemented.
“I promised to roll up my sleeves and get to work,” Brown told the crowd. She also touched on the 2016 legislature’s “historic” level of investment in education ($7.4 billion) and even improvements such as the law now allowing Oregon pharmacies to dispense birth control without a prescription.
In an interview with Oregon Business at LAIKA studios in March — following her signing of a bill to extend incentives for TV and film making projects — Brown offered a few more details about her relationship with the business community and her approach to leadership.
Known for her decades-long working relationship with unions, she is eager to tout her private sector accomplishments: e.g., the Office of Small Business Assistance (SBA) she founded as secretary of state and the assistance to new companies she says it provides. SBA will be expanded through the Senate Bill 1583 she signed this March.
“Small businesses are truly the economic engines of many parts of the state,” Brown says. “People say that Oregon has a challenging regulatory environment — part of that is the permitting and licensing at the local level, and SBA should help there.”
The state isn’t a direct job creator, Brown says, but instead provides the infrastructure for economic development. Through the Strategic Investment Fund (SIF), Brown has directed money toward three Oregon unmanned aerial vehicle test sites to bootstrap that industry niche. SIF also invested in cross-laminated timber company DR Johnson to spark that fledgling industry here.
“One of the most important things the state can do is partner with the business community to get that skilled, diverse workforce that meets employers’ needs,” Brown says.
As the OBA’s Deckert suggests, governors must possess a multitude of skills: They need to be personable yet pragmatic, detail oriented and on task day after day, yet at the same time be able to summon big vision and goals that unite people across party lines.
Brown scores well on the first counts; she is universally deemed congenial. “I like Kate,” says Rep. Julie Parrish (R-Tualatin/West Linn), echoing the sentiments of many. “She is so much more genial to work with than Kitzhaber, and more accessible. You can get her ear on things, you can walk into her office and explain things, and that’s a trade-up from her predecessor. It’s a different attitude and also a different level of attention.”
But on other metrics, Brown’s rankings are more equivocal. Kitzhaber, though his reputation has suffered serious damage, is still referred to by many Oregonians as a natural leader — a person who gravitated others toward his big goals. Kate Brown, not so much.
During public appearances — her State of the State speech, the keynote she delivered during the Oregon Leadership Summit in January — Brown comes across as entirely competent, but not especially inspiring. She connects easily one on one, but her timing with a crowd seems just slightly off. Her personal style has an analog in her leadership style.
“I don’t think she is going to be prone to big fixes, big ideas, says Jon Chandler, head of the powerful Oregon Home Builders Association. “She’s not prone to unified field theories kind of thing.” That’s not necessarily a criticism, he says. “With Kitzhaber, it was exhilarating or terrifying if you were a target of his fixations. But an awful lot of stuff doesn’t get done when you are fixated on big things.”
But if Brown’s style is more transactional than visionary, the challenge, of course, is that the state is facing more than its share of big problems that require big fixes. A case in point: not passing a transportation package during the 2015 legislative session. “The failure to address transportation needs in any meaningful way is having and will have a tremendous and negative impact on all Oregonians, including businesses and their employees,” said Tim Boyle, CEO of Columbia Sportswear, in an email. “It is critical for us, and it is already deterring investment.”
Boyle says he has been pleased by Brown’s outreach to the business community — the governor called him the weekend before she was sworn in. But “from a policy perspective, it is hard to name many developments that help our business or industry, and unfortunately, it is easy to name several that are harmful.”
Passing a transportation package is a priority, Brown agrees. But she defends herself for even trying to tackle an issue that has eluded compromise for many years. “I frankly felt it was gutsy of me to even give that a shot.” Thrown abruptly into the governor’s chair, she admits she is feeling her way into her new role, and that she could use more training bringing diverse stakeholders together. “I still wish I had more training around facilitation and negotiation,” she says. “It’s something you are using every day.”
A transportation bill is not the only specter haunting Brown’s next term; a budgetary beast also looms large. Governors usually inherit budgets from their predecessors, and formulating a new budget is a key place where a governor gets to make important impact. On the one hand, Brown benefits from Oregon’s current well-performing economy; on the other; she must look ahead to the reality of no secure funding streams and billion-dollar shortfalls in 2017 budget forecasts.
In this ongoing drama, a citizen initiative, IP28, is playing the role of plot thickener. The corporate tax hike, abhorred by most business groups large and small, would affect around 600 of the state’s largest companies. If the measure passes, these companies would be required to pay 2.5% on gross receipts (as opposed to paying tax on their profits).
Possibly because it is a measure that hasn’t yet officially qualified for the ballot, Brown hasn’t taken a stand. She did conclude her State of the State speech by acknowledging the state needs additional revenue but said any new proposals will have to meet three criteria: “Does it actually bring additional revenue to the table? Does it require out-of-state businesses to pay their fair share? Does it unduly burden Oregon families and our homegrown businesses?”
That is a tall order. And it is exactly in this realm that business is beseeching her to show more guidance. “Can the governor get the right stakeholders and find a more business-friendly solution to resolve this issue?” asks Linda Moholt, CEO of the Tualatin Chamber of Commerce. “We expect her to do this. This is her job.”
Pacific University’s Jim Moore outlines a similar strategy for Brown’s next shot on transportation in 2017. The governor must do more than “come up with good ideas and figure out how to pay for them,” he says. She needs a broader range of experts — not just the group of lawmakers who held secret meetings during the 2015 session — and a plan for successfully pushing through obstruction.
“[Rep.] Mike McLane (R-Powell Butte) and [Sen. Ted] Ferrioli (R-John Day) have been very clear they are going to use the transportation package as a hostage to try to get other things they want,” Moore says. “So it can’t just be the ‘Gang of 8’ figuring things out. It was business leaders that contributed to the package moving along as far as it did. Brown’s challenge is to sit everybody down and say, ‘Let’s negotiate our way out of this.’”
Whether Brown will be able to summon all manner of negotiating skills remains to be seen. If goodwill, plenty of training and a positive attitude are sufficient, she will have smooth sailing. Recent polls, like that from Portland-based DHM Research, indicate that if Brown keeps working without unexpected misconduct, her popularity will likely allow her to keep her job come November. She has a 51% approval rating, and that number has held relatively steady from a similar poll of a year ago. In addition, neither of the Republican opposition candidates, Allen Alley or Bud Pierce, have the necessary combination of name recognition, government experience and financial wherewithal Brown has.
But if Brown has a relatively clear shot at re-election this year, the 2018 race is far from a sure thing. There won’t be a presidential election (featuring, perhaps, the first female Democratic nominee), and there won’t be any U.S. senators on the ballot.
Business leaders say Brown missed a chance with the minimum wage bill, and many would like her to take a more aggressive stance and conduct more effective outreach. Moholt, for example, says she has had more direct interaction, assistance and inspiration from the federal Small Business Administration — especially through its “Startup in a Day” program — than she has had outreach from the state’s office of Small Business Assistance.
In a hardened, polarized political climate, Brown must constantly veer center if she wants to keep the needs of the business community front and center — and craft the kind of grand bargains that will help lead the state to fiscal security and offer solutions to the myriad challenges the state faces, from homelessness and education funding to transportation infrastructure.
The governor needs to be aware she can’t run with extreme positions, says Nitin Rai, managing director of Elevate Capital and president of the TIE Oregon entrepreneurial nonprofit. “She’s got to support the business community and social progress,” he says. “I see a huge storm coming,” says Rep. Parrish. “We haven’t tackled any of the hard problems. Let’s say IP28 doesn’t pass. We’ll need someone with enough steel in their spine to make really, really hard financial decisions.”