photo by KELLEY HAMBY		LEAD STORY Taking Stock of Kitzhaber Politics, like the stock market, can be volatile. And to be sure, since going public, GovKitzHbr, Inc. has had its shares of ups and downs. Still, our market analysts are bullish on the long-term outlook of this investment. BY JOSH FEIT jfeit@wweek.com
WEB EXCLUSIVE! Kitzhaber's top campaign donors for 1994 The governor's wins and losses in his battles with the legislature. Gov. Kitzhaber has convened 45 task forces. The conservative Cato Institute gives Gov. Kitzhaber an "F" for being the country's most fiscally liberal governor.		When John A. Kitzhaber was elected governor in November 1994, he was considered a blue chip stock. As Senate president from 1985 to 1993, Kitzhaber earned a reputation as an environmentalist, a moderate Democrat and a consensus builder whose bipartisan orchestration of the Oregon Health Plan was considered groundbreaking. With Marlboro Man good looks, Levi's blue jeans and Roseburg charm, he won 622,000 votes statewide--enough for a 51-to-42 margin over Republican opponent Denny Smith. If Kitzhaber were a stock, his price on inauguration day Jan. 9, 1995, would have been higher than Microsoft's on Windows '95 day. In much the same way that a publicly traded company's price is affected by exterior developments, such as the bombing in Sudan or Oval Office trysts, John Kitzhaber's stock has been affected by factors outside his control--a Republican Legislature, for example, and a hot economy. Ultimately, however, shareholders and Wall Street analysts value a company on its own assets and its own liabilities. What follows is WW's admittedly subjective attempt to track the stock of John Kitzhaber during his first term. JAN 1996 Inauguration MAY 1995 Working Man's Blues By signing a Republican-authored workers' compensation reform bill, Gov. Kitzhaber raised doubts about his commitment to working people. Midway through his first legislative session as governor, Kitzhaber signed the bill at a time when Oregon's workers' comp rates had been steadily dropping, suggesting that the state was not awarding unnecessary claims to injured workers. Yet the bill, SB 369, gutted the rights of injured workers. Among other things, the bill prevented them from getting permanent disability if they were able to get a minimum-wage job. It also prevented workers from testifying on their own behalf in permanent-disability claims. More important, SB 369 increased the burden of proof for injured workers. Personal-injury lawyers, admittedly not the most objective observers, were incensed. "Kitzhaber stabbed workers in the back," says lawyer Doug Swanson. By 1997, the bill had spawned the Injured Workers Organizing Project, a coalition of 90 workers who had lost claims in front of the Workers' Compensation Board. Meanwhile, a case challenging the bill has reached the Oregon Supreme Court. JULY 1995 Take This Gov. Kitzhaber vetoed 52 bills in the 1995 session, 12 more than the previous record set by Vic Atiyeh in 1983. The vast majority of these vetoes were honorable efforts to curtail the excesses of a Republican Legislature. None of Kitzhaber's vetoes, however, was as significant as his rejection of Senate Bill 600. In fact, Kitzhaber told WW that rejecting SB 600 was his "most satisfying veto." SB 600 was a sly attack on Oregon's land-use laws. The so-called "takings" bill would have forced taxpayers to compensate landowners for obeying green regulations. It would have rendered environmental measures such as wetland protection, wildlife-habitat regulations and open-spaces rules too expensive for state and local governments to enforce. "That was probably the worst of the bills," says Jonathan Poisner, executive director of the Oregon League of Conservation Voters. The applause from environmental circles is revealing. Kitzhaber is generally criticized for his lack of proactive achievements, but he's simultaneously extolled by progressives for just saying no to the Republican majority. "Some really bad bills have passed," says OSPIRG's Randy Tucker, "and Kitzhaber stopped them. In many ways we might criticize his performance, but we're lucky he's in office. I'd rather be criticizing him than dealing with someone else." Kitzhaber is aware that he spent his first term playing goalie rather than forward. He sums up his vetoes this way: "We've tried to move an agenda, and we've tried to stop an agenda." During his first term, Kitzhaber has vetoed a total of 95 bills, and the governor's office has initiated 25 legislative items. Fifteen of those items, including two tough-on-crime bills, were eventually signed into law. JUNE 1996 Car Talk In 1991, Portland, Eugene-Springfield, Medford and Salem-Kaiser set goals to reduce vehicle miles traveled per person by 10 percent over the next two decades. The idea was to inspire more investment in public transportation and mixed-use urban planning. In 1996, however, leaders from Salem-Kaiser and Medford complained that the 1991 transportation planning rule--adopted and enforced by the state Land Conservation and Development Commission--was too lofty. Kitzhaber's staff recommended cutting the goal in half. "[Salem-Kaiser] thumbed their nose at the rule," says Keith Bartholomew, former staff attorney for 1000 Friends of Oregon, who sat in on the negotiations at the Land Conservation and Development Commission. "They sensed that the governor wasn't serious about the issue, and they were right. He's nowhere to be seen." A government employee familiar with the negotiations agrees. "The governor should have got on the phone with the leaders of Salem-Kaiser and said, 'What are you guys doing? This is serious state policy.' It's fair to say that he dropped the ball." Kitzhaber's 1997 natural-resources budget, which, in part, goes to support environmental and land-use laws, was 10 percent less in real dollars than his predecessor Barbara Roberts' budget. OCT 1996 Kicks Are for Kids It took a lot of courage for a politician to support a hefty tax increase in 1996, but that's exactly what Kitzhaber did when he proposed that the state keep the "kicker." Moreover, he did it on enemy turf. The kicker is the term for unbudgeted tax revenues that the state receives because of good economic times and then "kicks" back to the taxpayers. In 1997, Oregon corporations got a kicker of $203 million. Personal taxpayers received $430 million. Kitzhaber's plea to keep the money for schools came before the kicker's most ardent believers, Associated Oregon Industries. "The practical effect of the kicker," he told AOI members, "is to keep the state from reinvesting...in the infrastructure on which...economic growth depends. The analogy would be a large company, like Intel, passing a corporate policy that says they can't invest any profits in plant improvement, in equipment or in work force development. There isn't a successful private industry in the late 1990s that can succeed with that kind of corporate policy." Despite the plea, Republicans rejected the plan to keep the kicker. FEB 1997 Don't Hold the Mustard Thanks to Gov. Kitzhaber, Oregon is one of two states in the union that allow the Army to destroy deadly chemicals, such as mustard gas, inside its borders. The other is Utah. Kitzhaber ignored several letters from U.S. Rep. Peter DeFazio urging him to use his gubernatorial authority to stop the construction of the chemical-weapons incinerator in Umatilla. Applegate says the governor responded to DeFazio's letters by looking into alternative disposal methods for the chemicals but found no compelling options. "We stand by the decision to build the incinerator," Applegate says. JUN 1997 Dr. Kitzhaber, I Presume? By pioneering the Oregon Health Plan as a state senator, Kitzhaber already demonstrated that he was in front of the curve on health-care issues. His commitment to innovative health-care policy was reaffirmed when, as governor, he signed Senate Bill 21, the 1997 Patient Protection Act. The legislation, pushed by Oregon Health Action with the blessing of Kitzhaber, was a precursor to national legislation being debated in Washington, D.C. SB 21 required managed-care insurers to provide timely access to emergency services without prior authorization, make a doctor responsible for all final recommendations, disclose information about exclusions and limits on covered services, explain all prior authorization that affects coverage, disclose rules relating to the plan's drug formulary and release statistics related to the grievance provision. SB 21 also regulated the grievance provision itself. Health-care advocates such as Oregon Health Action's Ellen Pinney had their specific complaints about the final version, mainly that there isn't an external grievance process. But Pinney called the plan "a very strong first step." In real dollars, Kitzhaber's 1997 human-resources budget, which included health-care costs, was 12.6 percent higher than his predecessor Barbara Roberts' budget. JULY 1997 Secondhand Smoke Once again, Kitzhaber demonstrated his willingness to lead, especially on something he cares about, such as health care. When the health-plan budget passed in the summer of '97, Kitzhaber's value peaked. After Republicans forced Kitzhaber to cut the Oregon Health Plan by 15,000 people in 1995, the governor campaigned for Ballot Measure 44--a tax on cigarettes--to rescue the plan. The $206 million from the cigarette tax allowed Kitzhaber to increase Health Plan funding by 17 percent in real dollars over 1995 and expand coverage to a potential 27,000 people. Not everybody is happy with the governor's increased spending. Last week. Kitzhaber was slammed by a Washington, D.C., think tank for his liberal spending habits (see Scorecard, page 12).   JULY 1997 Get off the Grass Kitzhaber signed a bill making possession of marijuana punishable by 30 days in jail. The new law ended Oregon's 24-year practice of treating possession of less than an ounce as a noncriminal violation. AUG 1997 Kitzhaber said he supports physician-assisted suicide. OCT 1997 Logan Kitzhaber born OCT 1997 Crash Kitzhaber's desire to fix Oregon's transportation infrastructure crashed when the governor's office came up with a cockamamie way to raise the needed $852 million. The plan created four new bureaucracies; taxed people in a cornucopia of ways, including a bizarre tax on utilities, and alienated moderate Senate Republicans. It's hardly surprising that the plan died in the Legislature. OCT 1997 No New Tax System Kitzhaber's lackadaisical approach to reforming Oregon's anachronistic tax structure may have been the biggest disappointment of his first term. Nothing highlighted the governor's dormancy on the issue as much as the shenanigans of his gubernatorial Republican challenger, tax activist Bill Sizemore. Sizemore held a two-day conference in Salem to look at several tax-reform packages. The conference was refreshingly diverse and stands in contrast to Kitzhaber's unwillingness to exercise any leadership. Kitzhaber followed up the Sizemore show by announcing the formation of a tax-reform task force that did little more than explain how our current system works. A Phase II task force is currently sifting through proposals, but few expect Kitzhaber to push the issue next session. Kitzhaber spokesman Bob Applegate called tax reform an "editorial-board issue that the public doesn't care about." JAN 1998 The Forest from the Trees A real drag on Kitzhaber's value has been the pull of the forest industry. A telling example showed up in a letter the governor sent to U.S.D.A. Forest Service Chief Mike Dombeck protesting Dombeck's plan to strengthen roadless-forest protections west of the Cascades. Kitzhaber asked Dombeck to ax the plan. Dombeck complied, and environmentalists now worry that Kitzhaber's meddling may hurt western forests. JAN 1998 Kitzhaber in China APR 1998 Multitasking The overabundance of fruitless Kitzhaber task forces--he's established 45--was exemplified by the log-jammed Forest Practices Advisory Board. The Forest Practices Advisory Board was set up in October 1997 and charged with updating Oregon's 1973 Forest Practices Act, which, among other things, established the concept of riparian buffer zones, 30-to-100-foot strips of land on the banks of rivers and streams where logging is restricted to protect the health of the waterways. "Kitzhaber is a broker," says Mary Scurlock, a task-force member from the Pacific Rivers Council. "He's trying to keep everybody at the table, and that goal has overridden his ability to provide leadership on the issue." Even Applegate, the governor's spokesman, says the Forest Practices Advisory Board has done little more than "create animosity between the parties." "There is no hope that the...process we are currently engaged in can succeed, and no reason for it to continue," Oregon Forest Industry Council President Ward Armstrong wrote in an April 28 letter. The task force has done little policy work since April, only visiting a few streams and attending seminars on fish migration. Its last two scheduled meetings, on July 21 and Aug. 18, were canceled at the request of OFIC. "We went into stasis after that," says Glen Spain, a fishing-industry spokesman and task-force member. "That's when things started breaking apart." Spain blames the holding pattern on the task force's quest for consensus, which, he says, has nullified the ultimate goal of doing something about saving forests. "By making policy that way," says University of Portland political science professor Jim Moore, "eventually you're just going to get a lot of people all sitting around looking at each other." MAY 1998 Crime Plays Kitzhaber spokesman Applegate calls the governor's $30-million crime-prevention proposal the administration's "biggest victory in four years." That's a bit of an exaggeration given that the plan still requires legislative approval. But Kitzhaber does deserve credit for keeping the plan alive after its first incarnation died in the Legislature. Kitzhaber's proposal will help fund local prevention programs such as after-school recreation, drug and alcohol rehab and homeless-youth counseling. In 1995 lawmakers rejected the proposal because it didn't allow enough local control. The new plan allows local leaders to devise their own prevention programs, based on the governor's model, and then apply for money. In a gruesome twist, Applegate says the Thurston High School shootings, which occurred just two weeks after the $30-million proposal was announced, will up the pressure on the Legislature to pass the plan. AUG 1998 Back to School Finally, a bold idea from the governor's office: a proposal to revamp the way the state distributes funds to higher education. The formula represents the type of innovative thinking that has been lacking from the governor's office during his first term. Under the new formula, each campus in the system of seven state universities keeps all the tuition it generates. Currently, tuition is pooled in Salem and doled out based on a college's need, which may have no relation to the number of students it educates. The second and more significant change allocates state support based on fields of study--with more money going to the sciences. This development is partly a response to Oregon's Silicon Forest, which has complained that the state's higher ed program is not cranking out qualified engineers. The idea is sure to generate heated debates over the role of education in society. Whatever one may think, Kitzhaber deserves credit for starting the conversation. SEP 1998 House Hunting Kitzhaber's stock goes up for doing his share of stumping on behalf of fellow Democrats. He's scheduled eight fund-raising luncheons, picnics and dinners for House Democratic candidates this season. In fact, Kitzhaber recruited two Democrats himself for this year's race: Frank Lonergan in the 38th district and Laurie Monnes Anderson in the 22nd district. By putting his weight into House races (Republicans control the House by two votes), Kitzhaber is clearly recognizing that his ultimate value depends on his ability to move the Legislature. SEP 1998 Something Fishy Applegate maintains that Kitzhaber's salmon-restoration plan is the governor's crowning achievement. That's a strange conclusion for two reasons. First, the feds listed coho salmon as an endangered species in August and undermined Kitzhaber's goal to keep D.C. regulators out of Oregon's streams. (The listing, ironically, is a good thing for Kitzhaber's plan because it adds a hammer of enforcement in case the forest industry's voluntary measures don't do the job.) Second, and most disturbing, in an executive order issued by Kitzhaber last week, the governor lowered the standards for strengthening the Forest Practices Act. This decision could undermine the health of salmon runs.   Kitzhaber's stock in 1998 is clearly lower than it was in 1994. Certainly, part of the decline has to do with unrealistic expectations. Even so, there are many who feel that the governor's devaluation is the result of his reliance on generating consensus as a means to spark big ideas. Observers would prefer that the governor lead by using big ideas to spark consensus. A number of legislators, activists, academics, reporters and lobbyists dock the governor for being "too cautious." "He's been in for four years, and we're still waiting for clarity," says University of Portland professor Jim Moore. "What does he plan on doing? He's got to make something an issue." "A lot of Kitzhaber's first term was spent setting up the second term," says Jonathan Poisner of the Oregon League of Conservation Voters. "It was all task forces. We will see in the second term how effective that was." Kitzhaber defends himself: "You don't start out with a change. This is the way I do business, and it's worked that way for 20 years, and I'm not going to do it differently now. The objective of public policy is to get something done, not simply propose things." We couldn't agree more; the way to get things done, however, is to lead with big ideas. On Sept. 9, the governor is expected to go into campaign mode by announcing his three top priorities for a second term: stabilizing the state education budget, preventing juvenile crime and preserving Oregon's environment. These issues are certainly worthy of investment. Voters, however, should demand specific plans in which to take stock.   originally published September 9, 1998