Dogged by questions of leadership and a shaky relationship with business, the governor goes on tour to find out what employers want — and share her vision of a prosperous Oregon.
On a fitful spring day in Eastern Oregon, a five-car convoy muscles its way down Slough Road, a gun barrel of asphalt that shoots north out of Baker City past farms and fields unfurling below the Blue Mountains. Gov. Kate Brown, deep in a three-day road trip, has come to this red swath of her big blue state to meet with business and civic leaders and to sign ceremonial bills that please even her conservative constituents.
These are feel-good events to celebrate millions of state dollars that fund a new Eastern Oregon University field house in La Grande, bring broadband to rural schools like one in Pendleton, and even help Hermiston’s Lamb Weston, the $3.2 billion producer of frozen French fries, expand. All of these fit into a plan for prosperity that the governor calls Future Ready Oregon.
Yet something more immediate is afoot on this trip, too: The governor is here, during an election year, to begin crafting a budget vision for a state that has struggled to make ends meet. To do that, she’s asking the business community for input.
“I really believe that by bringing people together, we can solve these big issues,” she says.
Balancing Oregon finances is a big issue indeed, and getting the private sector onboard isn’t easy, either. State coffers swirl around a black hole thanks to a volatile tax system and the $25 billion unfunded liabilities of PERS, the public employees retirement system. Yet during her tenure so far, the governor has acted more in accordance with her labor and social issues constituency.
She has advocated for taxes on corporate receipts through Measure 97, supported the minimum wage increase and signed a bill to deny S Corps (some of the smallest businesses in the state) a $250 million annual tax break included in a federal tax overhaul.
But Brown also considers herself an ally to small businesses and called a special session on May 21st that ultimately gave about 12,000 of the state’s sole proprietors (with at least one employee) a break that goes easier on the state’s general fund at a cost of $15 million annually.
The decision to call that special session may have deflected some S Corps blowback but it also drew fire from both sides of the aisle. Democrats bemoaned the loss of money for the general fund; Republicans accused the governor of pandering.
All of it means Gov. Brown’s relationship with the business community has become rather “challenged,” Sean Robbins, senior vice president for public affairs, Cambia Health Solutions, said in an email.
Measure 97 was really the turning point, though. “She found herself in a bitter, divisive and expensive ballot initiative that may have made for good politics but was bad policy. It’s fair to say that it caused a rift.”
The two sides have been working to mend that rift — the multibillion transportation package helped — but there’s more work to be done and time is barreling toward election day. So Gov. Brown has hit the road, from Bend to Enterprise, to sign bills when the cameras are rolling, yes, but also to demonstrate in backrooms, classrooms and pubs that she’s a leader willing to bring opposing forces together to solve some of Oregon’s more challenging problems.
That central question of leadership, and whether Brown can leverage it to forge a clear path to greener financial pastures, is a yoke her Republican opponent in November, Knute Buehler, will be sure she bears.
For now, the governor’s convoy slows on Slough Road and eases through a metal gate onto a thousand acres of grass and cows owned by the family of one of her aides. It’s picture time for the governor, who poses among the wet dirt and the churning sky, far from the safety of her valley. A storm is indeed gathering behind her, and for a moment it’s hard to tell if she’s standing strong or about to be swallowed up.
Jason Kaplan | Photo Store
Katherine Brown, lawyer, 57, loves her job, but she didn’t mean to become governor this way. In 2015 she was serving her second term as Oregon’s Secretary of State when an influence-peddling scandal forced then-Gov. John Kitzhaber from office just weeks into the Democrat’s second term of his second stint. Brown got a letter from Kitzhaber informing her he’d be stepping down and that the state’s highest office would be hers per the Oregon Constitution. It was Friday the 13th. Five days later, on February 18, 2015, she became Oregon’s second female governor, the first bisexual one in the nation.
Normally, if you run for governor, you have time to build a team. You study white papers on economics and policy positions and spend months drafting an agenda.
“That didn’t happen,” says Brown, who in person is affable, immensely curious and disarming in a BFF kind of way. Fortunately, she adds, Kitzhaber had already set a course that she “didn’t necessarily disagree” with. “I just knew there were too many things, and we needed to focus, so I picked some elements of his agenda —career pathways, early childhood, a transportation package, water and infrastructure,” she says.
“She found herself in a bitter, divisive and expensive ballot initiative that may have made for good politics but was bad policy. It’s fair to say that it caused a rift.” — Sean Robbins
Since then, Brown has racked up significant liberal wins despite the awkward manner in which she first took office—the same not-elected manner that kicked off her political career in 1991, when she was appointed to the Oregon Legislature to fill a vacancy. She pushed through the landmark $5.2 billion transportation package. She worked to extend health care coverage and passed coal-to-clean energy legislation and a clean-air act.
“I have to judge her by the outcomes and, wow, no other governor really stuck their nose into this,” says Mary Peveto, president of Neighbors for Clean Air. “That was the biggest environmental win in two decades.”
Brown has yet to rack up similar wins in the budget arena. The state enjoys low unemployment and a booming economy, yet structural budget deficits challenge efforts to align spending with revenues. Schools are cutting teachers at a time when Oregon has some of the worst high school graduation rates in the country. The state’s foster care system, a cause dear to Brown, is in shambles. The urban-rural divide seems only to be widening. And those on the left want Brown to pay attention to other gaps, too.
“The governor and the state have an opportunity to make sure that public money reflects the values that we Oregonians hold,” says Mara Zepeda, CEO of Switchboard and a co-founder of the progressive business group Business for a Better Portland. Women, Zepeda notes, are starting businesses three times as fast as men and yet they receive just 2% of venture capital. “How can we do a better job of meeting business needs?” she asks.
Zepeda calls Brown’s leadership “visionary” for her work on affordable housing, transportation and childcare because they use a bigger perspective to enhance economic health.
Yet polls suggest some wonder whether Brown is doing enough. Her approval rating has sagged to 43% and given the volume of unflattering editorials, it’s not difficult to imagine a dearth of newspaper endorsements come November, when she’ll face Buehler, a moderate two-term Republican state representative from Bend who fended off a challenge from the right during the primaries. If an incipient backlash against President Donald J. Trump, and by extension Republicans, weren’t in play, Brown’s re-election prospects might be less secure.
Yet this is Oregon, a brick in the blue wall, and plenty of voters adore Brown. Since January, the governor has raised about $1.7 million in donations, about $400,000 more than Buehler, who by House rules could not fundraise during this year’s 35-day legislative session, a rule that does not apply to the governor. By late May she had nearly $4 million in her war chest, 19 times the money Buehler had left over after the primary.
“I’d say despite all of this she’s sitting pretty comfortably, because the Republican party has done a pretty poor job of saying how it’s different,” says Jim Moore, director of the Tom McCall Center for Policy Innovation at Pacific University. “Meanwhile, there are Democrats out there who really wish she would step it up.”
Brown (who sailed through the primaries with 82% of the vote) is likely to win re-election, though not by a big blowout, Moore says. That’s nothing new. Brown won her first election to keep her appointed legislative seat in 1992 by just seven votes. Still, the lack of a formidable opposing force — Democrats control most of state government, and the primary election results could push the State Legislature even further left — means criticism might actually intensify over Brown’s ability to GSD, or “get stuff done,” as she is fond of saying.
“Our graduation rates are abysmal, homelessness is on the rise, the cost of living is too high and her answer is always higher taxes,” Buehler rejoins. “I’m hearing everywhere, rural and now urban Oregon, that she’s not getting stuff done.”
The governor and her retinue in Bend | Photo Store
A week before her Eastern Oregon trip, the governor came to Bend to, among other things, sign a bill to fund an expansion at Oregon State University-Cascades and to deliver a morning keynote at the Oregon Nurses Association conference, for which she received a standing ovation. A light rain had turned the pavement shiny and slick as she sat in her official, unmarked Tahoe parked outside Five Talent, a tech company that’s working to “connect the dots” between education and economy through a program called Apprenti.
The idea behind Apprenti is simple. Companies struggle to recruit and retain the talent they need, so Apprenti pools public and private money together to subsidize internships that directly lead to high paying jobs back in the company offering the internship. Brown had come to Five Talent to sign a memorandum of understanding. From now on, the state will pay about $2,800 for each intern to go through the 22-week Apprenti program.
“We would mud-wrestle if we had to get the talent we need, and this really helps by vetting applicants and then easing them onto the payroll,” says Preston Callicott, Five Talent CEO. “Businesses and the state all have skin in the game up front, which is totally different.”
Programs like these, as well as Brown’s push for $300 million in targeted investments in career and technical education and hands-on learning in schools, are key to Brown’s small business and education agenda, — a.k.a. “Future Ready Oregon” — which she likens to parallel ski tracks. They not only help small businesses grow by creating a capable workforce pipeline but research also shows hands-on learning greatly boosts graduation rates. (Brown believes more robust experiential learning efforts can elevate rates from 75% now to the mid-upper 80s in a matter of years.)
Her Oregon Promise initiative allows high school students earning average grades to attend community college for $50 a term. This approach yields cost control benefits, she says. An educated, working society ultimately leads to more self-sufficiency and stability, which in turn means less demand for government services, which helps control spending.
“I feel like we really missed the boat on what I grew up calling Vo-Tech,” Brown says.
This long-term, big-picture view gets a stamp of approval from some private sector employers. “Systems don’t exist in isolation,” says Zepeda. But for many business leaders, the time to solve the state’s financial problems is now. Brown, who will submit a budget package on December 1, says she’s ready. In fact, one of the reasons she’s on the road is to replicate a move out of her transportation-package playbook: Convene a series of meetings around the state, whereby some of the biggest employers and the most prominent business leaders and thinkers in each region sit around conference tables to get a crash course in budgetcraft and what Brown is doing to shore things up.
“I learned a hard lesson when we couldn’t get the [transportation] package through on the first go-around, and that is you can’t build a multibillion-dollar package out of nothing, that buy-in from stakeholders from around the state is absolutely critical,” she says. Taking the budget on the road “has never been done before, as far as I know,” she adds. “I’m not the first governor to struggle with this.”
Indeed, in a 2013 special session, Kitzhaber famously pushed through a “grand bargain” aimed at containing the rising cost of government pensions, while funneling more money into schools, colleges and mental-health programs. Two years later, after Brown became governor, the Oregon Supreme Court struck down the PERS cuts as unconstitutional.
Gov. Brown signing a bill to help Eastern Oregon University fund a new field house that will use Oregon-made cross-laminated timber | Photo Store
After a speech before a packed crowd at OSU that Buehler, an OSU graduate, conspicuously did not attend, Brown popped into a stuffy room upstairs. There Callicott and representatives from Brooks Resources, Central Oregon Seed, MountBachelor, the Bend Chamber of Commerce, OSU and Ochoco Lumber, among others, were absorbing a budget presentation from Brown’s staff, state financial officer George Naughton and chief of staff Nik Blosser, that deconstructed the PERS situation and the work her administration is doing to tackle it. That includes a new incentive fund she created that allows struggling school districts to set aside PERS payments that the state will match in part. Brown has made a point to praise publicly Sen. Tim Knopp, a Bend Republican, for finding the money to do it.
The reaction to the talk seemed mostly positive. “What I saw in that briefing was a semblance of a plan which was encouraging,” says Callicott, who considers himself a “purple” voter who wants to “take care of the homeless and needy but balance the budget, too.”
“The plan for revenue is still a big question,” he says. “My worry is that some version of [corporate tax] Measure 97 could get regurgitated, and people would start bailing out of Oregon.”
Gov. Kate Brown holds a budget meeting with business and community leaders at the OSU Cascades campus. | Photo Store
Business taxes are no doubt a tricky subject for Brown, who says she “really struggled” with the bill she signed blocking S Corps from a 20% state tax break included in President Trump’s budget package. From her perspective, such “pass-through” businesses already get two state tax breaks, and adding a third would starve the state of $250 million a year that Oregon cannot afford. Business owners like Callicott say the break would have allowed him as many as 30 new hires.
The governor is also reaching out to others who may feel dissed, especially in the rural corners of the state. A week after the Bend visit, the governor attended another budget-outreach meeting in Pendleton, this one with mostly county and regional leaders. She toured Pendleton High School’s Career and Technical Education facility and had a tuna-salad lunch with a group of women business owners in Hermiston. A need for more housing, a lack of tradespeople, and a polite distaste for the minimum wage hike all came up.
“The idea that we aren’t paid attention to out here or don’t matter is just false,” says Mark Mulvihill, InterMountain Education Service District superintendent.
“I learned a hard lesson when we couldn’t get the [transportation] package through on the first go-around, and that is you can’t build a multibillion-dollar package out of nothing, that buy-in from stakeholders from around the state is absolutely critical." — Kate Brown
There is little doubt that Brown has her work cut out for her when it comes to bringing rural Oregonians into the fold, but inclusiveness and equality are pillars upon which she says she has built her career. To tackle the task, she handed Lamb Weston representatives a check from the state's Strategic Reserve Fund for $500,000 to help expand its potato operations. She heard updates on water issues in the Umatilla Basin and then drove to La Grande the next day. There she signed a bill to help Eastern Oregon University fund a new field house that will use Oregon-made cross-laminated timber.
Echoing arguments put forth by regional civic leaders, Brown says these high-tech, advanced manufacturing sectors hold enormous potential for rural economies struggling with diminished legacy industries. She points to her work helping to incentivize a new sustainable aviation fuels facility about to break ground in Lake County. (Click here to read OB article on aviation emissions.) Work on drones in Pendleton has very nearly produced a “flying taxi” that could be the ride-sharing service of the future. She’s particularly proud of a $26 million rail transload facility in Ontario that will help drive down costs farmers face getting goods to market.
“If you set it up right, we’ll have really good paying jobs out here,” she says. “These are all game changers.”
Changing the game is something her own base wishes she would do with more vigor. Maybe she should have gone out to Burns during the Malheur occupation to show support for the community, despite the FBI asking her to stay quiet. Perhaps she’s letting Oregon slip behind California and Washington on the climate-change-battle leaderboard. Some constituents seem underwhelmed that leadership appears to come more from the Legislature. Jody Wiser of Tax Fairness Oregon doesn’t doubt why:
“She really hasn’t had time to stop, and consider where we should go.”
Jason Kaplan | Photo Store
The storm brewing outside Baker City intensifies but Brown leaps into the Tahoe and heads back down Slough Road. On her last morning in town she grabs a booth at Sumpter Junction, a cafe near the I-84 interchange, and inhales a plate of eggs and toast paired with a cup of plain hot water. Time is never a governor’s friend — she has a meeting in Wallowa County lingering — so she breezes through her childhood in Minnesota, her fondness for baba ghanoush and a good porter, and how coming out to her Republican mother in 1995 about her bisexuality was “really hard.”
Does she have any regrets?
“No,” she says. “I do wish I had learned more about economics, and I think I shut myself down in the math arena too early.”
She wears “metal underpants” to deal with criticism and mentally separates herself personally from attacks on her job, which she says has brought her incredible joy (watching sage grouse mate “in the good old days” with then-Interior Secretary Sally Jewell) and incredible pain (the 2015 mass shooting at Umpqua Community College). Her motivation for being governor stems from a deep-rooted sense of duty to bring justice and equality to a world that is sorely deficient in both, and she credits her husband of the past 20 years, Dan Little, an easy-going Forest Service retiree and avid skier, for supporting her when she needs him most.
“I’m her activity director,” Little jokes, adding that “nothing really irks her other than me.”
The vision she has for the next four years boils down to a big, systems-wide shift beyond any single bill that “changes the recipe” for how Oregonians thrive. It involves sustainable funding for the Oregon Health Plan, fortifying the workforce through career paths, and developing a comprehensive system of pre K-12 education that sets the stage for success later in life. Business, she says, has to be a key player in all of this. “Fixing PERS” and “balancing the budget” don’t explicitly come up when asked for her list of three “game-changing” priorities.
Critics want more. “The Governor deserves credit for launching these [budget] conversations, but the challenge we face is right here, right now,” said Robbins in his email.
He called Brown “warm” and “genuine” but added that solving Oregon’s budget issues “once and for all will require a unique combination of leadership and executive management skills.” (Cambia Health Solutions, Robbins' employer, has contributed $20,000 to the Buehler campaign.)
Brown sits upright and lets out a quick sharp laugh when the conversation steers toward her willingness to lead.
“Being a leader is more than standing up and pounding the podium,” she says as a toy train mounted to a track inside the cafe trundles past the table. “Leadership used to be a guy riding in on a horse and saving the world. John F. Kennedy? He was Camelot. He was going to save us. That’s not how it works anymore. It’s giving communities the tools they need to be successful. It’s not me telling places like Baker City what they need to thrive. It is me helping them remove barriers.”
Sure, people judge her based on a male model of leadership, she says, but she also seems reluctant to elaborate, which suggests she’d rather have gender not be an issue at all. She already knows what it’s like to get paid less than the male lawyer next to her. She also knows she enjoys privileges for being white. “Diversity, inclusion, equality can’t just be the icing on the cake,” she says. “It has to be the recipe.”
Bryan Hockaday, Brown’s press secretary, looks at the time.
“We need to get going,” he says.
Brown shakes the waitress’s hand and hops back into her Tahoe. Soon the car is blowing pasts signs to “Make Oregon Great Again” toward an Oregon horizon still mottled with clouds. (Additional reporting by Linda Baker in Portland.)
Jason Kaplan | Photo Store
Clarification: This article has been amended to reflect Cambia Health Solution's contribution to the Beuhler campaign.
A version of this article appears in the June 2018 issue of Oregon Business. Click here to subscribe.