John Kitzhaber

As John Kitzhaber prepared to step down in 2003 after serving two terms as the governor of Oregon, he issued a warning. Oregon, he said, was on the verge of becoming “ungovernable.” Feuds with Republicans in the legislature had resulted in 200 vetoes, earning Kitzhaber, a former emergency room physician, the nickname “Dr. No.” When he left Salem, few expected he’d return.

“I was pretty burned out, pretty disillusioned,” he says now. But when the economy collapsed in 2008, the former governor began to think about a return. The next year, he surprised political observers by announcing he would run for a third term. He won by a mere 21,000 votes, in the process becoming one of the nation’s three current third-term governors (along with Jerry Brown of California and Terry Branstad of Iowa).

Kitzhaber immediately confronted a $3.5 billion-plus revenue shortfall—a significant sum for a state with a general fund budget of $14 billion—as well as a House that was evenly divided between Democrats and Republicans. In Washington, it would have been a recipe for gridlock. In Salem, it became the basis for a remarkable series of bipartisan achievements. Democrats agreed to make steep cuts to balance the budget. Republicans agreed to pass House Bill 3650, one of the nation’s most daring efforts to change the way health care is delivered. It’s a radical bid to cut the growth of health-care costs by transforming Oregon’s Medicaid system into a network of coordinated care organizations. The Salem-based Statesman Journal described the legislative session “as one of the most remarkable in the state’s history.”

Early successes seem to have whetted Kitzhaber’s appetite for change. In the special legislative session that ended in October, Democrats voted for cuts to public employee pension funds, a change that will reduce the state’s unfunded pension liability by a third. Republicans accepted tax increases on corporations and wealthy individuals. Both parties agreed to build on a previous education reform package by passing legislation that funded additional teachers and school days, as well as providing tuition relief.

What distinguishes Kitzhaber is his readiness to try new things, says Ray Scheppach, the former executive director of the National Governors Association, now a professor at the University of Virginia. “He is willing to take risks, to innovate and sometimes to fail,” says Scheppach. “And that’s a good thing.” Consider HB 3650. It’s an attempt to coordinate treatment for the sickest and costliest people while promoting health more broadly. It’s also a gamble. In order to receive $1.9 billion over five years from the federal government, the state promised to reduce the annual rate of Medicaid growth by 2 percent within two years. If it fails, Oregon could face significant penalties.

Failure isn’t something Kitzhaber appears to think about very much. Indeed, he’s indicated that if he seeks and wins a fourth term as governor, his top priority will be overhauling the tax code in a way that adds a sales or consumption tax. Such efforts have repeatedly failed. Oregonians have voted down sales taxes nine times since 1957. Kitzhaber has indicated that he won’t be pushing a proposal so much as an approach.

“The role I play now is as convener,” says Kitzhaber, who served as Senate president for eight years before first becoming governor in 1995. “I try to be a facilitator between the parties and develop a space for trust.”

It’s hard to disagree with the results. In the last special session, legislators approved all five of the bills he presented. Number of vetoes so far in the third term? Just four.

By John Buntin