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September 22nd, 2010 NIGEL JAQUISS | News Stories
 

Dr. Do-Over

The Democratic gubernatorial nominee’s toughest opponent may not be Chris Dudley.

     
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CANDIDATE THEN: Kitzhaber circa 1994. IMAGE: Steven Lane Photography

John Kitzhaber has been in public office for most of the past 32 years, yet he remains an enigma to many Oregonians.

The ex-legislator and former two-term governor is unlike the affable Gov. Ted Kulongoski or dependably anti-government Bill Sizemore, both of whom have also operated in the public sphere for decades. With them, as with many career politicians, what you see is what you get.

Not with Kitzhaber.

The former emergency-room doctor is complex, inscrutable and, judging from his return to politics, unsatisfied with his accomplishments so far.

Kitzhaber frames the challenges facing Oregon perhaps better than anyone, yet his record in tackling those challenges is, even by own his admission, mixed.

He’s a 63-year-old, Ivy League-educated city boy who dresses like a ranch hand. He’s intensely private and yet seeks the most public of jobs. He’s scary smart but not known for surrounding himself with the best and the brightest.

And he has expressed a disdain for politics, yet he is now seeking to become the first Oregon governor (he served previously from 1995 to 2003) in history to regain the office after leaving it.

“When John Kitzhaber first came on the scene, I thought he was going to be a Clintonesque policy wonk, but he never displayed Clintonesque love of politics as an interaction between human beings,” says Pacific University political science professor Jim Moore.

“He became something of a conundrum,” Moore adds, “And we didn’t have the conversation about who he really was in 1998 because the Republicans collapsed and ran Bill Sizemore against him. Bill Bradbury didn’t force that conversation in this May’s primary, so in effect we end up having John Kitzhaber seeming to run against himself.”

Kitzhaber’s race against GOP rival Chris Dudley is a dead heat; however, it’s hard to escape the feeling that many voters are mulling a choice not between Democrat and Republican but between the John Kitzhaber they know and the John Kitzhaber he says he can be.

*

Kitzhaber took an unusual path into politics. After graduating from South Eugene High School and then Dartmouth College in 1969, he attended medical school at what is now Oregon Health & Science University.

He went on to work as an emergency-room physician in Roseburg, where he also acquired his cowboy getup.

After unseating incumbent Rep. Al Shaw (R-Roseburg) in 1978, he galloped into Salem clad in Western gear.

Some lawmakers viewed his boots and oversized belt buckle with bemusement.

“I always felt at his core he was about as much of a Eugene/Portland liberal as he could be,” says former Sen. Jan Wyers (D-Portland), who served with Kitzhaber in the Senate for a decade. “But the costume seems to have worked.”

Kitzhaber acknowledges he’s no cowboy.

“I’d like to tell you I used to break broncos,” he says. “But in Douglas County, I had a lot of friends who were sheep ranchers, and I did a little vet work on the side. Out in those pastures, cowboy boots are not so bad.”

Changing times make comparing governors difficult.

Kulongoski’s legacy will be that of a governor who raised income taxes, pushed through significant reform of the state’s public employee retirement system, passed two major transportation packages and, perhaps too aggressively, subsidized Oregon’s green economy.

Barbara Roberts, Kitzhaber’s predecessor, was Oregon’s first female governor. Although she spent much of her administration grappling with sweeping property-tax cuts from 1990’s Ballot Measure 5, she also oversaw an expansion of vital human services such as Head Start and led the battle to defeat a pernicious anti-gay ballot measure.

Neil Goldschmidt, who will be forever tarred by a statutory-rape scandal, grew Oregon’s tech industry, fostered unparalleled cooperation between government and business, and surrounded himself with people who continue to run much of the state today.

None of those three governors was as popular as Kitzhaber, who has never lost an election. He won his first governor’s race with an 8.5-percentage-point victory over Denny Smith. None of the other three Democrats ever won by a margin that big. Then, in his 1998 re-election bid, Kitzhaber hammered Sizemore by 34 points.

Despite his popularity, Kitzhaber struggled to get things done.

Kitzhaber’s signature policy initiative while he was governor was the Oregon Health Plan. It was a revolutionary idea: reform the state’s Medicaid program by prioritizing medical procedures.

By refusing to underwrite some procedures, the program could afford to cover more people.

The plan gave precedence to preventive, primary-care medicine and discouraged high-cost, high-risk procedures, such as organ transplants. So providing an elderly woman a new kidney would fall far below prenatal wellness.

The OHP was bold public policy. By many accounts, however, it failed to achieve Kitzhaber’s goals.

Federal officials balked at the idea of a priority list with a cutoff line.

While the plan did expand the number of poor Oregonians covered by insurance, its costs increased about 78 percent from $1.33 billion in 1993-1995 to $2.36 billion in 1999-2001.

In addition, a key OHP component—compelling companies above a defined size to provide insurance to workers—never got off the ground.

“The truth is, the plan has been nibbled to death,” says Jack Roberts, a Eugene Republican who was commissioner of the Bureau of Labor and Industries from 1995 to 2003 when Kitzhaber was governor.

Kitzhaber acknowledges the plan did not work as he hoped.

“It didn’t do anything about the [healthcare] delivery system,” he says.

As governor, Kitzhaber proposed many other novel ideas, including a revamped method of calculating a gas tax; the Quality Education Model, which sought to define the necessary amount of money required for K-12 education; and even the possibility of tearing down the Snake River dams.

Voters put the QEM into the state constitution in 2000, but its requirement that the Legislature fund K-12 “adequately” is unenforceable. The other ideas never went anywhere.

“I never really had major policy disagreements with John,” says Jack Roberts. “But for all his big ideas, what most people don’t realize is, he really hasn’t delivered.”

Kitzhaber blames the first Republican-controlled Legislature in 40 years.

As a result, his singular achievement as governor may have been his veto of 200 bills—more than any other governor—which earned him the nickname “Dr. No.”

“His ability to affirmatively pass things was effectively nil, but his value in vetoing potentially bad things was huge,” says Brett Wilcox, CEO of Summit Power Alternative Resources and a Kitzhaber supporter.

Republicans say Kitzhaber made little effort to find middle ground.

“John is a wonderful guy, but he was a lot more interested in policy than actually running the state,” says former Senate President Gene Derfler (R-Salem).


CANDIDATE NOW: Kitzhaber says he will do a better job of using the “bully pulpit” if he’s elected governor again. IMAGE: leahnash.com

Kitzhaber makes no apology for the vetoes.

“Some of the bills they sent me were just ridiculous,” he says. “Like the one that would have exempted housing for migrant farmworkers from electrical inspections. That’s just wrong.”

But even some of his strongest supporters wish Kitzhaber had spent his political capital more effectively.

“After his second victory as governor, I had lunch with him,” says Gerry Frank, former chief of staff to U.S. Sen. Mark Hatfield (R-Ore.) who says he’s known every governor since his uncle, Julius Meier, who held the position from 1931 to 1935.

“I said, ‘In my opinion, your legacy should be in revamping the tax structure.’ He had enormous popularity, and I wish we had taken that on,” Frank says. “I don’t know why he didn’t.”

Kitzhaber doesn’t entirely disagree. “We were engaged in some really big issues, like the Quality Education Model,” Kitzhaber says. “[But] I think that if you want to make a list of things I could have done better, actively managing state government would be one of them.”

*

The mystery of John Kitzhaber is not simply why a talented, popular politician chalked up such a slender record of accomplishment.

It’s also puzzling that a lone wolf like Kitzhaber wants to reclaim a job that demands people skills he has seldom displayed.

Even many who have worked closely with him say they don’t know him well.

For three of the four terms Kitzhaber served as Senate president, his counterpart in the Oregon House was fellow Democrat Vera Katz (who would go on to become Portland mayor from 1993 to 2005).

Although the two communicated constantly, Katz says they were never close.

“He was quite a loner,” Katz recalls.

Wyers, the former senator from Portland, says Kitzhaber’s circle was small.

“Not many people would say they were on the inside with John,” says Wyers.

The governors who preceded and followed him, Barbara Roberts and Kulongoski, are both far more outgoing and involved in helping other candidates than Kitzhaber.

When The Oregonian asked Kulongoski in 2003 how he was different from Kitzhaber, Kulongoski replied, “I like people.”

Kitzhaber has not been shy, however, in seeking office. He broke one of the unwritten rules of politics in 1994 when he challenged an incumbent in his own party, using the backing of Goldschmidt and others to knock Roberts out before their party’s primary.

“I wish he’d shown the same kind of chutzpah after he won the office,” says Moore, the Pacific University professor.

Kitzhaber even considered challenging Kulongoski in 2006 but eventually backed off, not out of loyalty to his onetime close friend but because the timing was wrong.

“I didn’t think there was an opportunity to really bring about fundamental change,” Kitzhaber now says.

When Kitzhaber mulled entering the 2010 governor’s race, one of those he consulted was Gerry Frank.

Frank says he strongly encouraged Kitzhaber to jump in, but acknowledges Kitzhaber has an unusual makeup for somebody who wants to lead the state.

“John is a very private person,” says Frank. “Highly intelligent, but extremely private. I think it has hampered his effectiveness.”

Kitzhaber says he knows he needs to be a far better communicator if he’s elected again. In retrospect, he says, he spent too much time with the Legislature and crafting policy, and too little time engaging with Oregonians.

“I was really more of the 91st legislator,” he says. “I don’t think I did a very good job of using the ‘bully pulpit.’”

There are flashes of the old John Kitzhaber on the current campaign trail and some glimpses of the new.

He still brims with wonky ideas, from shifting the state’s budget horizon from two years to 10 years or adapting the Oregon Health Plan priority list to the entire state government.

The new Kitzhaber, who lives in Washington County, draws on young lawmakers such as Reps. Jules Bailey and Jefferson Smith (both D-Portland) for ideas. And his longtime girlfriend, Cylvia Hayes, 43, a Bend green-energy consultant, has influenced his economic plan. (The Oregon Department of Justice and U.S. Attorney’s Office are investigating “potential contracting irregularities” involving the Oregon Department of Energy and Hayes’ company, 3E Strategies.)

And the new Kitzhaber is very specific about the ways in which he will say “no” to his party’s most concentrated source of cash—public-employee unions.

He wants to reduce the projected increase in total compensation for public employees in the 2011-13 biennium, and trim the current practice of government employers paying public employees a 6 percent pension contribution.

He proposes to consolidate Oregon’s 197 school districts and to move toward statewide collective bargaining, reducing the power of local unions.

In sum, Kitzhaber 2.0 is more of a technocrat than a Democrat.

That’s a change that pleases some key backers.

“The problems facing Oregon are just immense,” says Summit Power’s Brett Wilcox, who is no Democratic shill, having been a big supporter of former U.S. Sen. Gordon Smith (R-Ore.). “I personally came to the conclusion he’s the only guy who can solve those problems.”

Others are skeptical.

“I read now where he wants to get away from current service level budgeting [i.e., increasing the status quo to adjust for inflation],” says Oregon GOP chairman Bob Tiernan, who served in the state Senate under Kitzhaber.

“Where was he when we [Republicans] wanted to do that 16 years ago?”

Tiernan played the role of PERS Cassandra in the 1990s. He says Kitzhaber seemed uninterested in the issue.

“There’s some truth to [the claim] that we didn’t address the bigger issues,” Kitzhaber admits.

He offers a couple of different explanations for his failure to do so. The first is the booming economy that characterized the first six years of his administration.

“It’s harder to get traction when there’s so much money coming in,” he says.

He also acknowledges leadership shortcomings.

“What we lacked was an overall vision,” Kitzhaber says.

*

Since leaving office in 2003, Kitzhaber says, he has changed in ways that are tangible and some that are not.

His parents, with whom he was extremely close, died, and he’s had far more time to spend with his only child, Logan, 13.

He’s traveled widely, read extensively and spent countless hours thinking about how he could have been a better governor. He says he’s come to the conclusion that leaders must take a fundamentally different approach to how they provide services, collapsing the boundaries between “siloed” government programs and prioritizing every investment as he proposed doing with medical procedures.

“I think we can use this fiscal hole we’re in to leverage fundamental changes in the way government delivers services,” he says.

Jack Roberts and other critics say Kitzhaber’s motivation is simpler: He wants to be relevant again.

“I think he thinks he misses the spotlight,” Roberts says. “I don’t think he found that life outside of being governor was rewarding or fulfilling enough.”


JACK ROBERTS: “I think he [Kitzhaber] misses the spotlight.” IMAGE: Thomas Cobb

Kitzhaber certainly disappeared from public view after finishing his second term in 2003.

As a private citizen, he took two part-time positions: the first was as director of the Estes Park Institute in Colorado, which provides continuing education for medical professionals.

Locally, he joined the Foundation for Medical Excellence, where he started the Archimedes Movement, an effort aimed at reducing healthcare costs.

In 2007, Kitzhaber brought his Archimedes plan to the Legislature. Despite a Democratic majority in both houses, his bill went nowhere.

Kitzhaber smiles ruefully about getting rolled by fellow Democrats.

“It was a great example of how you could basically kill a big idea without having any sort of serious discussion about it,” he says.

In the 2009 legislative session, by his own admission, Kitzhaber played no role when Oregon lawmakers passed sweeping healthcare legislation. Nor did he play a role in the federal effort that resulted in President Obama’s healthcare reform package.

“I haven’t been involved,” he says.

Kitzhaber says his absence from both state and federal reform efforts was his choice. Policymakers, he says, should be focusing not on increasing the number of people who get healthcare coverage but on reducing the cost of health care.

“It’s like two fleas arguing over who owns the dog,” he says. “I don’t think this is a coverage problem.”

*

In many ways John Kitzhaber embodies Oregon values: He is an outdoorsman, fiercely independent and determined to improve the state he loves.

Nonetheless, Kitzhaber is, like Oregon, a study in underachievement.

For all of our state’s scenic majesty, pioneering ideas and independence, Oregon suffers from chronic unemployment and school dropouts, poverty, obesity and drug abuse.

The question for voters is whether Kitzhaber has changed enough in the past seven years to lead a triumph over those challenges.

Once before, Kitzhaber successfully remade himself. In high school, he was a slacker.

“I was a C student—middle of the pack,” he says. “I was just not motivated.”

But Kitzhaber says he wanted badly to attend Dartmouth College, where his father had previously taught English. He enrolled at the University of Oregon and earned good enough grades to transfer to Dartmouth. He planned to study biology and later, medicine, not to be a doctor but to research his real interest—artificial eyesight.

“It’s a fluke that I ended up an emergency-room doctor and a politician,” Kitzhaber says. “I never set out to be either.”

Now, he wants to be a politician again.

He’s about six weeks away from finding out whether he’ll get a “do-over” or, like Oregon, remain a monument of unfulfilled potential.

Kitzhaber’s V I P Loan

In 1999, then-Gov. John Kitzhaber entered into an unusual transaction to finance the purchase of a $306,000 Southwest Portland home.

The loan Kitzhaber and his then-wife, Sharon, secured was uncommon for several reasons: First, the lender was not a conventional mortgage lender. Instead, it was Bidwell & Co., a Portland stock brokerage.

“That’s very unusual,” says David Nelson, a Portland real estate lawyer. “If a brokerage firm makes loans, it’s usually through a subsidiary licensed to do so.”

State records show that Bidwell was not a licensed mortgage lender.

Brokerage firms do loan money against client holdings, but records show the Kitzhabers secured their loan with property, not securities.

The second curious aspect of the loan was that the Kitzhabers borrowed 100 percent of the purchase price. Conventional lenders typically require a down payment. Thomas Hendrickson, past president of the Oregon Mortgage Bankers Association, says few lenders made 100 percent loans in 1999.

Third, while conventional lenders prefer 15-to-30-year mortgages, the Kitzhabers borrowed their money for five years.

In other words, Kitzhaber obtained a loan the average Oregonian could not get—which is the kind of favorable treatment that has tripped up other pols, like U.S. Sen. Chris Dodd (D-Conn.).

The deed does not specify what interest rate, if any, Kitzhaber paid.

In January 2002, three years after the loan was made, Kitzhaber appointed Bidwell & Co. founder Jerry Bidwell to the Oregon Investment Council.

That gave Bidwell access to top investors and oversight of more than $50 billion in state pension funds. (Bidwell’s company contributed $6,900 to Kitzhaber’s two prior gubernatorial campaigns. Bidwell, who later sold his firm and moved to California, could not be reached for comment.)

Records also show that the month after Bidwell’s appointment, the Kitzhabers’ loan was extended by nearly three years.

Kitzhaber did not list the loan on the Statement of Economic Interests he filed as governor. Janice Thompson of the watchdog group Common Cause Oregon says he probably should have. “The purpose of the Statement of Economic Interests form is to disclose nonstandard transactions,” Thompson says. “This seems like a nonstandard transaction.”

The Kitzhabers, who divorced in 2003, paid off the loan in June 2006.

WW first asked Kitzhaber about the loan on Sept. 15. He said then he did not recall the details of the loan.

On Sept. 21, his campaign manager, Patricia McCaig, called WW and denied the Kitzhabers’ loan was unusual. “It was just an extension of the existing business relationship they had with Bidwell & Co.,” McCaig said.

McCaig also said Kitzhaber is certain he paid a market rate of interest but cannot locate the promissory note or any other documentation to support this claim. She says Kitzhaber did not believe that disclosure of his financial relationship with Bidwell on his Statement of Economic Interests was required. —NJ


Oregon governors may serve no more than eight of any 12 years. No Oregon governor has ever won re-election after leaving office for one or more terms. The last to try was Tom McCall, who lost in the 1978 Republican primary.

Shortly after leaving office, he filed for divorce from his second wife, Sharon. The couple share custody of their son, Logan, now 13, but few details of the divorce are available because, unlike virtually every other divorce file in Oregon, the Kitzhabers’ file is sealed.

Kitzhaber’s post-political salary at the Estes Park Institute was $103,000. The Foundation for Medical Excellence paid him $50,000 annually. In 2009, filings show he made 15 paid speeches around the country. Kitzhaber also collects a monthly PERS retirement check he says is about $2,500 per month.

 
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