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This Month's Edition

Oregon Transformation Newsletter


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Q and A with Knute Buehler, Republican Nominee for Oregon Governor

A Republican hasn’t been elected governor in Oregon since Gov Vic Atiyeh was reelected in 1982. The losing streak runs nine consecutive elections, the longest losing streak by a single political party in the nation. Many political pundits predict a national “blue wave” in the 2018 midterm elections as a counterforce to President Trump. Meanwhile, Gov. Brown’s approval numbers remain stubbornly and dangerously below 50 percent. In Oregon, what will prove to be the more important force in the gubernatorial election: the president’s unpopularity or Gov. Brown’s own unpopularity?

Governor Brown is unpopular because she’s been a failed leader. Her record and failed leadership will be the issue because she is on the ballot. Our budget has never been bigger, but she’s supported $13 billion in new taxes. She hasn’t fixed PERS, one in four kids aren’t graduating high school, our foster care system is in crisis, millions have been wasted in health care; she’s had a revolving door of agency heads. Salem is a mess. Oregonian’s from all political parties know it, and they’re eager and open for change.

In 2017, CNBC ranked Oregon 41st in the nation for “business friendliness.” At the end of May, Gov. Brown called a one-day special legislative session to push for a narrowly targeted income tax cut for sole proprietorships. First, Brown signed Senate Bill 1528, which eliminated the federal income tax cut on Oregon income, and then she called a one-day special session claiming that helping small businesses is an issue that “can’t wait any longer.” Was their any economic philosophy behind the governor’s call for a one-day session, or was this just a crass politics attempt to shore up her political vulnerabilities?

The special session was political theater designed to boost her reelection, not help small business owners. She created the crisis when she signed a bill to deny 250,000-plus Oregonians tax relief they were set to receive under federal law. I will repeal the entire tax when elected.

You stated, “Perhaps there is no worse example of the consequences of one-party dominance than the failures of Oregon’s education system. For nearly a decade, Oregon schools have ranked near the bottom in education quality despite increased spending by the state. Our graduation rates and drop-out rates are a disgrace. Yet, Kate Brown and Democrat leaders just shrug their shoulders in resignation.”

Are the problems in our public education impossible to solve? Will voters allow the Democrats to once again shrug their shoulders and continue their status quo failures, or have they finally had enough of rock bottom education results? How would you bring a new era to education reform that doesn’t resemble the tired, failed policies of past Democrat administrations?

We can and must rescue these kids from our failing schools. There are lots of good things happening in schools across Oregon every day. But our graduation crisis is just that – a crisis. I won’t be beholden to status quo politics that paralyze Governor Brown. I will combine the best outside education policy talent with the best inside talent to drive change. I will be personally engaged. We need to tackle PERS so that we can drive dollars back into classrooms learning. We need to fully fund the career and technical education because those programs help keep kids in school. And we need to experiment with innovative ideas for teacher certification, training and compensation. We can do this. If we don’t – our kids are the worse off.

An April front page New York Times headline read, “A $76,000 Monthly Pension: Why States and Cities Are Short on Cash. Governments are struggling as mounting pension obligations crowd out the rest of their budgets. Oregon faces a severe, self-inflicted crisis.”

In the August Oregon Transformation Newsletter you said, “Oregon schools aren’t underfunded because Oregonians are undertaxed. They’re underfunded because rising pension (and health care) costs are cannibalizing dollars for classroom learning.” Last spring Phil Knight told the newsletter, “Left unchecked, PERS would simply sink the state.” Why did it take a front page headline in the New York Times to get Democrats in this state to finally acknowledge the damage PERS has been doing? And is that acknowledgement enough to finally change voting behavior so that a Republican can get elected governor?

A front page New York Times story always gets attention, but the truth is policy makers across Oregon have known about this problem for many years. Anyone serving on a school board, city council, county commission or serving in the legislature knows that pension costs are eating up budgets faster than taxes can keep up. Governor Brown’s own appointees to the Oregon Investment Council have raised the alarm. What is lacking is the political leadership from a governor – this governor – to fix the problem. I will lead on pension reforms and have outlined my approach in detail throughout the primary election.

Last summer a CNN/Money headline detailed Illinois’ massively underfunded public employee pension system, “How Illinois became America’s most messed up state.” Even though Illinois has become the poster child for public employee state indebtedness, Allen Alley estimates that the Oregon public employee pension exposure is greater per capita than that of Illinois, and that the exposure is as much as $200 billion. Is that true? And if so, what can we possibly do about it? As the first Republican governor in Oregon in more than three decades, how would you shape a consensus for change?

A governor sets the table – and the expectations. I will do that. We need to honor our obligations – we will do that. But we need to put a lid on big payouts. We need to have employees contribute a portion of their retirement accounts. We need to design a new system, like a 401k, that employees own. We need to not pass another state budget that doesn’t make progress on PERS. If Democrats in the legislature need me to blame for approving pension reforms, I am happy to play that role. This isn’t a partisan matter any longer, it’s a math matter. Raising taxes to bail out a broken system is a recipe for fiscal catastrophe.

In 2011, Wisconsin Gov. Scott Walker signed legislation that limited collective bargaining in Wisconsin. In 2012, Michigan Gov. Rick Snyder signed legislation prohibiting public employee unions from automatically deducting union dues from members’ paychecks. In the 2016 presidential election, both Wisconsin and Michigan voted Republican, even though Wisconsin had voted Democrat in seven previous presidential elections, and Michigan in the last six. If Oregon becomes a “right to work state” in 2018, due to the pending Janus decision expected in June, do you think politics could change here the way it has in Wisconsin and Michigan?

The government unions have been very aggressive in Oregon pushing for higher taxes – like Ballot Measure 97 – to solve the fiscal problems of the state. But higher taxes into a broken budget, pension and health benefit system is a Band-Aid and a bailout. It won’t solve the problem and will lead to slower economic growth, higher taxes and no changes in cost structure. How the Supreme Court decision will impact how unions operate is hard to calculate. What’s critical is that we restore fiscal responsibility to the state budget and our pension system so that the tax dollars people expect to pay for services are indeed paying for services.

Last August you told the Oregon Transformation Newsletter, “When elected governor, I’ll need the talents of thousands of people to bring change and reform to state government. I look forward to opening the doors of state government leadership to many Oregonians who have been shut out for decades due to Democrat dominance of state politics.”

What creative, innovative minds are on your short list of Oregonians who have been shut out of state government leadership? Who would you choose to help rebuild Oregon’s entrepreneurial spirit? What qualities and skill sets will you look for?

I think it’s premature to name names – sorry. I won’t have any partisan litmus tests. I will look for people who want to make Oregon better, no matter their party registration. I am a data person, so I like people who follow the numbers and facts more than ideology.

John Burns, CEO of the Port of Coos Bay and a strong advocate of Jordan Cove (the $10 billion LNG export terminal and pipeline), described the economic plight of many Coos Bay residents and why they need Jordan Cove this way. “There are too many people in this area just standing by the road with nothing to do, with no hope, no opportunity.”

The Federal Energy Regulatory Commission (FERC) is expected to approve the application to build Jordan Cove this year. Last year local residents in Coos Country voted 76-24 in favor of the project. Sen. Merkley came out against Jordan Cove in December. Gov. Brown remains neutral about an investment in Coos County, even though it’s twice as big as the $5 billion investment that Amazon is making in its second headquarters.

What is your position on Jordan Cove? Do you expect your campaign for governor to be, in part, a statewide referendum on the very high poverty rates of rural Oregon?

I strongly support Jordan Cove. Governor Brown has refused to support it – denying jobs, tax revenues and hope to southern Oregon. A governor needs to be a voice for all of the state – not just a single region, party or ideology. I will push hard to advance the necessary state approvals and will lobby hard for federal approvals.

You describe your political experience this way: “I’ve now run three competitive campaigns – one statewide and two in Democrat-leaning Bend. Each time I’ve had the Democrat-government union-environmentalist machine working hard to defeat me. I’ve won twice and lost once.”

In November, that machine, with its record of nine gubernatorial wins in a row, will be in full gear to defeat you. Because they can’t defend their 30-year record in business, education or general prosperity, what tactics do you expect they will use to beat you? How will you counter them?

I expect Governor Brown and her allies to run a negative and misleading campaign against me. I will focus on the failed Brown record and my solutions to fix Oregon’s biggest problems. I intend to focus on the local, personal impacts of the failed Brown record. I will debate her with civility, sincerity and honesty. Oregonians need this debate – this is how we decide issues in a democracy. And Oregonians need to decide if they are satisfied with a budget they cannot afford, too many schools failing too many kids, foster children in crisis, a runaway pension system and indifference to rural communities that creates poverty and hurts families. I’m running to provide the leadership to solve the big problems Kate Brown has ignored, avoided or made worse since she became governor. I’ll lead where she has failed.

By Allen Alley



Kate Fumbles and Knute Wins

Knute Buehler will win in November and become our first Republican governor in more than 30 years because Kate Brown is going to fumble it away. Just like the football player who casually lets the ball drop before crossing the goal line, Kate Brown and her team are destined to do the same thing, and they won’t be able to help themselves.

First of all, Kate Brown is not John Kitzhaber. Nor, for that matter, is she Ted Kulongoski. Brown, an accidental governor, has no meaningful real world experience or any policy to point to that defines her administration.

Buehler, on the other hand, was an Oregon State baseball player, OSU’s first Rhodes scholar, a graduate of John Hopkins Medical School, a successful doctor, a businessman and a Republican state representative from a district with a Democratic majority. Buhler is fiscally conservative and socially moderate. He perfectly fits the ethos of modern Oregon. He is comfortable working with transportation and homeless issues in Portland, but he also can relate to rural Oregon natural resource issues from the perspective of his hometown of Roseburg and his home in Bend.

What it comes down to is this: Given the overwhelming registration numbers, the paid political consultants will say to Governor Brown, “Look, all we need to win the election is to hold 90 percent of the Democrats, split the Independents and NAVs, and we don't need one single Republican vote. We are going to run hard to the left. We have AFCME at tackle, SEIU at guard, we have the teachers union (OEA) at center. We have a star QB with Our Oregon, and Planned Parenthood is ready to come in off the bench. You just get the ball and run hard left. There will be a lot of noise about appealing to a broader base, or appeasing some small business groups. Ignore it. Get behind AFCME, SEIU and OEA. They will get you to the end zone. Remember, we don't need one single Republican to vote for us.”

The most ironic thing is that Democrats have used their overwhelming electoral advantage to basically rig the game. They have dramatically expanded government payroll and retirement benefits without fully reserving the funds to pay for them. The very organizations that derive their power from providing these outsized benefits, the public employee unions, are the largest donors to Democratic campaigns. PERS alone has created a $218 billion liability that frankly threatens the financial solvency of the state. The progressive far left and the public employee unions cannot fix this problem. Only someone from the other team can. Oregonians recognize this and are ready to see a game played on equal footing.

So how does this play out? The bone crushing blocks on Buehler have already started. According to NARAL, Buhler is “masquerading as a moderate pro-choice lawmaker.” So a guy who openly declared in a Republican primary that he is pro-choice and who passed bipartisan legislation to increase access to contraception isn’t pro-choice enough? Oregonians won’t buy that.

The progressive far left coaching staffs will try to make Knute out to be Donald Trump with a goatee. They will spend millions and millions of dollars to do it, but it won’t work. Because Oregonians are too smart, and Knute Buehler has spent a lifetime building his family, medical practice, business and career as a public servant to be exactly the person that a majority of Oregonians want to lead our state. Actions speak louder than words.

So Kate will take the handoff, and she will gain a lot of yards. They will march down the field, and just as they are about to walk into the end zone, she will get overconfident, start the celebration early and drop the ball. Knute will pick it up, and race down the sideline to become the first Republican governor in 30 years. You can take that to Vegas and tell ’em you got a hot tip from Allen.

Democrats Lean Left for Wins but Potential November Losses

The primary results are in and there are a number of things we can take away from the results. The statewide “nonpartisan” race to replace Brad Avakian as the head of the Bureau of Labor and Industry ended in a victory for Democrat Val Hoyle over Republican Lou Ogden. Hoyle cruised to victory with around 52 percent of the vote and 35 percent going to Ogden. Hoyle was victorious in counties such as Deschutes, Marion, Tillamook and Polk, all of which are counties a Republican candidate needs to win in order to be competitive in a statewide race.

Union County Commissioner Jack Howard received around 12 percent for labor commissioner. Howard did not submit an entry for the voter pamphlet statement and did not open up a candidate Political Action Committee. Without running much of a campaign, simply being on the ballot and having a normal name seemed to be enough to net Howard more than 84,000 votes. Hoyle received a lot of financial support from the unions and institutional support from the typical Democratic Party infrastructure. Winning statewide office is already a tall order for Republicans in Oregon, and in this election there was no perfect Republican storm of circumstances like the one that elected Dennis Richardson to statewide office.

One big takeaway from the May 15 primary elections in Oregon is that the stakes of the 2018 election are higher now than they were before the election results. With Democrats on the verge of supermajorities in both the House and the Senate, this was going to be a pivotal election, but both political parties may have raised the stakes with their choices. Where Republicans took specific actions to appeal to a wider group of Oregonians, Democrats moved decisively to the left.

For the last few elections, the Oregon legislature has had a fairly dramatic difference between their Democratic House members and their Democratic Senate members. House Democrats, led by Speaker Tina Kotek, are a much younger, more activist, and with a handful of exceptions, very progressive group. Senate President Peter Courtney and other Senate Democrats represent an older, more measured type of Democrat, who take pride in the process and seek bipartisan support whenever possible. Many pieces of progressive legislation sail through the House only to die in the Senate. A major example of this is the effort to lift the state prohibition on rent control.

Shemia Fagan's defeat of longtime incumbent Senator Rod Monroe this May could be the first domino in a reshaping of the Democratic Senate Caucus. The older, more moderate Senate is now giving way to the younger, activist types in the House. Current Democratic Senators are now under pressure to play ball on the progressive agenda or face a well-supported primary challenge, just like Rod Monroe did when he voted against rent control. The Senate has served as a check against the highly partisan, progressive inclinations of the House. But with Rod Monroe’s ousting there is a crack in the dam.

With the election victories of Knute Buehler for gubernatorial candidate, Jessica Gomez in SD 3, Selma Pierce in HD 20, and Christine Drazan in HD 39, Republican primary participants made a choice to select candidates that should have a broad appeal to voters beyond just base Republicans. Additionally Republicans have made a noticeable effort to recruit a class of candidates across the state that offer more women and more racial diversity.

Democratic voters chose to replace Rod Monroe with Shemia Fagan, and in House District 32 Democratic primary voters passed on the more experienced current county commissioner and former legislator Tim Jossi in favor of the less experienced but more progressive candidate Tiffany Mitchell.

The battle lines for the 2018 are clear and stark, much more now than they were on May 14.

Now any single legislative race could be the one that tips the balance of power, which only raises the stakes of the governor's race higher. Democrats have made a hard move to the left and Republicans have made a move to the middle. Come November we will see the consequences of the choices each party made.

By Jacob Drew Vandever

By Dr. Eric Fruits

The Power of the Veto

The Oregonian editorial board recently declared the governor’s race is “for real.” As a slightly right-of-center candidate, Republican Knute Buehler maybe be close enough to the center to convince non-affiliated voters and some disaffected Democrats to vote for a change of party in the governor’s office.

There’s another reality, however.

The recent primary results suggest both houses of the Oregon legislature are headed toward a Democratic supermajority.

I take that back. The legislature is almost certain to have a Democratic supermajority. Add to that the likelihood that the far left will take over leadership of the Senate by knocking Sen. Peter Courtney out of his position as Senate president. Taxpayers, homeowners and employers are going to be on a wild ride for the next two years.

Taxes, taxes and more taxes

With a three-fifth supermajority, Democrats can pass a tax bill without a single Republican vote. Unless the governor vetoes it.

Cap-and-trade is going full-steam ahead. The Clean Energy Jobs Bill amounts to a $1.4 billion tax increase on Oregon residents and business. Both Gov. Kate Brown and House Speaker Tina Kotek support the cap-and-trade bill. There’s nothing really stopping this expensive and complex legislation.

Unless Knute Buehler, as governor, vetoes the bill.

At a May Portland City Club forum, Governor Brown says she plans to work with state lawmakers in 2019 to craft a ballot referral to reform the state’s property tax system. Sen. Mark Hass, who has spent years on a wide range of tax increase proposals, indicated that property tax reform is one his top three tax code priorities. Remember, taxes in Oregon are almost never “reformed” downward.

Sen. Hass has spent several sessions trying to pass a gross receipts tax in Oregon. He almost succeeded last session but was stymied when he realized he couldn’t get a supermajority to sign off on a massive tax increase. Next session, in 2019, that’s all going to change.

Unless there’s a veto threat.

Paid day care

In 2016, Gov. Brown signed an aggressive minimum wage law that ensures Oregon’s minimum wage will be $14.75 in 2022. A year earlier, she signed a sick leave bill requiring all but the smallest employers provide 40 hours of paid time off. In July of this year, the state’s “predictive scheduling” law hits employers in the retail, restaurant and lodging industries.

In the halls of the Capitol, Democratic lawmakers and progressive interests have been mumbling about imposing some sort of paid day care law. This could take the form of an unfunded mandate pushed on employers – perhaps by requiring they provide their employees with some free or nearly free day care option. It could also take the form of taxpayer-funded child care centers, presumably run by unionized day care providers. Democrats won’t need a supermajority to pass paid day care, but even a near supermajority can ram it through.

With only a potential governor’s veto to give pause.

Campaign finance

Sometime in the next few weeks, the U.S. Supreme Court is going to rule in Janus v. AFSCME. At stake are agency fees, which public sector unions can collect from employees who don’t join the union that represents them. The plaintiff in Janus, claims such fees are an unconstitutional act of compelled speech. A ruling against the unions could shrink their funding and, in turn, their power at the state and local levels.

If the court in Janus rules the way many observers think and union funding shrinks, prepare to see pressure for campaign finance “reform” in the state.

Oregon allows for virtually unlimited campaign contributions in state and local elections. If Janus turns off the tap of funding to unions and the Democratic candidates they support, expect Democrats in the legislature to push for changes to campaign finance laws as a way to “level the playing field.”

The downside would be a stifling of speech from businesses and employers. A possible upside would be the strengthening of the major parties in Oregon as the Democratic and Republican party organizations would then be seen as a conduit for campaign funding. Regardless of the upsides or downsides, with a Democratic supermajority, it’s more likely than not that any “reforms” would be heavily one-sided to favor the party in power.

That is, unless the governor vetoes, or threatens to veto, the legislation.

The Oregonian is right in concluding the governor’s race is “for real.” There’s real competition and there are real world issues with real stakes. If the legislative races go the way most people think, a governor’s veto is the only thing standing in the way of a mass of new laws targeted against taxpayers, homeowners and employers.