A Killer Dispatched From California is Strangling Oregon Unions and Measure 97

Paul Mandabach slipped into Portland from Los Angeles early this past summer like an assassin.

He'd been summoned to the exclusive Arlington Club on Southwest Salmon Street for a contract job. It was a familiar assignment—much like the 160 jobs he had done in the past 30 years in Nevada, Washington and, especially, California.

That's where Mandabach had developed a reputation for being professional, ruthless and, most importantly, deadly to progressive ballot measures.

His clients this time? An alphabet soup of business associations: the Oregon Business Council, the Oregon Business Association, the Portland Business Alliance, and Associated Oregon Industries.

They and the CEOs of their member companies waited eagerly for Mandabach to arrive.

A threat—Measure 97, a proposed $3 billion tax on corporations orchestrated by the public employee union-backed advocacy group Our Oregon—hung over them.

They needed Mandabach to make it go away. He calmed their fears.

"My impression at the time was that finally a slumbering giant was awake," says one person who was at the Portland meeting and spoke to WW on condition of anonymity. "[Our Oregon executive director] Ben Unger managed to do what no one in the so-called business community had managed to do: unite business on a political endeavor."

Six months later, Mandabach is squeezing the life out of Unger's measure.

Polls show that since early September, support for the tax has plummeted 15 percentage points under a blizzard of negative television ads, from 60 percent in July to the mid-40s in three polls conducted this month.

Although it's not yet certain, Mandabach appears on the verge of doing what nobody had done this century: beat Oregon's labor unions on their home field, in the fight public employee unions have long wanted.

For more than 25 years, parents, teachers and labor unions searched for ways to raise new tax revenue in a state that had slashed and capped property taxes in the 1990s.

This year, they chambered their magic bullet: Measure 97.

Related: Let's debunk three myths about Measure 97, Oregon's huge corporate tax proposal.

Given recent history, it seemed like a safe bet. Our Oregon was undefeated in its past 19 ballot measures. (See chart below.)

Its biggest advantage: a highly sophisticated get-out-the-vote operation that regularly mobilized Multnomah County's Democratic army, and the additional benefits of high turnout for the presidential contest and 250,000 voters newly registered by the Oregon Motor Voter law.

Yet with less than two weeks remaining before Election Day on Nov. 8, Our Oregon and its allies are in danger of losing—not once, but twice.

Even as Measure 97 flounders, its biggest financial backer, the Oregon Education Association, is taking fire on another flank. The teachers' union and its affiliates have poured millions into passing Measure 97, leaving them without the resources to knock down Measure 98, a seemingly innocuous initiative aimed at improving graduation rates.

Measure 98 is the pet project of Stand for Children, a billionaire-funded education advocacy group that wants to reform schools, in part by reducing the dominance of teachers' unions.

The measure is something of a Trojan horse animated by the same source as the campaign against Measure 97: a flow of outside cash unparalleled in recent Oregon political history.

"We've never seen this kind of out-of-state spending before," says lobbyist Len Bergstein, who first managed a statewide campaign in Oregon in 1974. "We've always been kind of a cheap test market for things you might want to take to other states. But with the locus of power shifting away from the federal level, people can rationalize heavy spending at the state level."

Related: Thanks to Multnomah County voters, this damned election won't end on Nov. 8.

The twin challenges to union power on the November ballot suggest that Oregon has become a staging ground for a larger fight over who should pay for public services and what those services should be.

The hired guns and national funders shaking up this election may move on to the next state after the ballots are counted. But their work in November could significantly alter Oregon's political landscape.

"Since at least 2000, Democrats have done well at the ballot, and Our Oregon has done very well," says Bill Lunch, emeritus professor of political science at Oregon State University. "But the folks who have come in this cycle have been very effective."

Undefeated

Since its founding in 2005, Our Oregon, an advocacy group funded mostly by public employee unions, has defeated numerous statewide ballot measures and passed a few of its own.

Our Oregon wrote Measure 97, the $3 billion corporate tax increase on the November ballot, and is running the campaign to pass it. Polling shows the measure has lost ground quickly, and business groups could hand Our Oregon its first-ever loss.

Here's the Our Oregon winning streak.

The Man Who Could Beat Our Oregon

Paul Mandabach had been to Oregon before.

In 1996, he beat back an expansion of the Bottle Bill. In 2000, he experienced a rare defeat when Oregon trial lawyers defeated a measure that would have capped medical malpractice awards.

In its 31-year history, however, Mandabach's firm—the aptly named Winner & Mandabach Campaigns—says it has racked up victories in 90 percent of the measures it contested. Its wins included a 1998 measure that legalized gambling at Native American casinos in California. It was an $88 million campaign, one of the biggest ballot measure campaigns ever in California.

Although Oregon's initiative system is older and has generated more measures than California's, California produces vastly more expensive measures.

Mandabach, 68, declined to be interviewed for this story. People who have been around him say he favors tweed jackets and has a passion for race horses. He's also methodical and disciplined in his approach to ballot measures

"[Winner & Mandabach is] the gold standard of this kind of work," says a veteran out-of-state political consultant who's worked against the firm. "What they are the best at is message development."

Winner & Mandabach has made a fortune defending corporate America at the ballot box. Firms typically earn about 15 percent of their clients' total expenditures on a campaign.

In Oregon, the business community was tired of losing.

In 2014, Our Oregon stomped Measure 90, which would have created open primaries. Proponents, mostly business interests, were hoping the measure would reduce the power of the public employees' election machine.

Our Oregon defeated a similar measure in 2008, and in 2010 it rammed through controversial income tax increases in the form of Measures 66 and 67. For good measure that same year, the organization helped beat the business community's handpicked candidate for governor, Republican Chris Dudley.

Regardless of the issue, Our Oregon always won. The group is a 501(c)(4) tax-exempt organization founded in 2005 that has a modest annual budget of about $1.5 million, most of which comes from public employee unions. Its power derives from its ability to mobilize hundreds of thousands of union members and millions of their dollars.

"They've done very well on ballot measures, where a lot of law gets made in this state," says Paul Gronke, a professor of political science at Reed College. "They are very powerful, and they are very well-funded."

This year, Our Oregon set out to address its backers' belief that Oregon's government needs more money. Unger and his colleagues crafted a giant tax increase aimed at a relatively small number of very large companies—think Walmart, Comcast and Wells Fargo—that are relatively unpopular. Measure 97 would levy a tax of 2.5 percent on such companies with Oregon sales over $25 million.

When business leaders contemplated how to defeat Measure 97, Mandabach's firm was the only one they considered. They knew his work from a $32 million Oregon campaign in 2014 that narrowly defeated the labeling of genetically modified organisms. (Mandabach defeated GMO labeling in California and Washington before the Oregon contest.)

Western states are filled with political consultants whose measures have been defeated by Mandabach, and who mostly don't want to discuss his tactics on the record.

Speaking on background, several consultants paint a similar picture: Mandabach first tells his clients what it's going to cost to win. In the case of Measure 97, that number was north of $20 million. If clients can commit to that number, he rolls out a sophisticated polling and message-testing operation.

"He hires the best researchers and the smartest pollsters," says one consultant.

An analysis of Measure 97 television spots—now as ubiquitous as Viagra ads during football games—shows remarkable similarity to spots he's run in other states, and even ads from the seemingly unrelated anti-GMO-labeling campaign in 2014.

In both campaigns, Mandabach promoted four basic messages: The measure would hurt small businesses. Experts (often in lab coats or other professional garb) say it's a bad idea. Proponents are lying. And, most importantly, it will cost you money.

One of the earliest ads Mandabach produced for the No on 97 campaign featured the clean-cut, silver-haired former president of the Oregon Medical Association, Dr. Colin Cave.

"The last thing Oregon families need is a state tax that would make the cost of prescription medicine and health care even higher," says Cave in the ad. "But that's exactly what Measure 97 would do. It would tax the sales of all types of goods and services, including medicine and hospital care. That would increase the health care costs in our state by nearly $100 million per year."

Paige Richardson, who ran Oregon's pro-GMO-labeling campaign in 2014, says Mandabach usually has enough money to produce and air numerous ads at the same time, a luxury most campaigns can't afford.

"He acts just like a defense attorney—he sows doubt in his audience," Richardson says.

Our Oregon's Unger, the person most responsible for Measure 97, says Mandabach's approach amounts to a cynical manipulation of voters.

"The fact that they use the same messages over and over, no matter what the issue is, means you probably shouldn't trust them," Unger says.

One of the reasons Mandabach wins so often is that he almost always starts with a large financial advantage. Mandabach's fundraising advantage in the Measure 97 campaign is significant: He's raised $22.5 million, compared to the Yes on 97 campaign's $11 million. The biggest donors to the No on 97 campaign—Costco, Kroger and Albertsons/Safeway—are out-of-state corporations. Records show that the "no" campaign has paid Mandabach's firm $1.1 million so far. The firm also earns a commission on ad purchases.

But the business community has typically outspent the unions in the past—it just hasn't spent its money well.

"The level of discipline and research-based credibility Mandabach has brought to this campaign is something new," says Ryan Deckert, president of the Oregon Business Association. "I'm really impressed."

Winning Argument

The Los Angeles political consulting firm Winner & Mandabach Campaigns has mastered the art of communicating to voters the information that will most move them to vote against ballot measures: a threat to the voters' wallets.

The firm has deployed that argument in two recent Oregon ballot measure campaigns. Measure 92, the 2014 GMO-labeling proposal, and Measure 97, a $3 billion tax on big corporations, would appear to have little in common—except that big companies don't like them.

But Winner & Mandabach, which ran the "no" campaigns on both measures, has used the same warnings against both measures.

The Stealth Bomber

Toya Fick is a former teacher and political staffer who in 2014 quietly became one of the most influential people in Oregon education circles not drawing a public paycheck.

That's when Fick, 36, whose accent retains the flavor of her Louisiana upbringing, became executive director of the Oregon chapter of Stand for Children.

Stand for Children is a little bit like Widmer Hefeweizen—often overlooked in its hometown of Portland, it's a well-known brand in other parts of the country.

The K-12 education advocacy group opened its doors here in 1996 and now operates in 11 states, pursuing a mixture of grassroots organizing and high-level, big-dollar politics.

With Fick, a former policy adviser to then-Sen. Hillary Clinton (D-N.Y.), the local chapter of Stand for Children significantly elevated its profile this year. It's sponsoring Measure 98, which would require the Legislature to offer districts $800 per high school student for dropout prevention and vocational education.

It is an apple-pie-and-motherhood measure—who would oppose raising Oregon's graduation rate, the nation's third lowest? And unlike Measure 97, which would simply commit the new tax dollars to the state's general fund, Measure 98's spending plan is specific.

There's not a single argument against Measure 98 in the Voters' Pamphlet.

Chuck Bennett, longtime lobbyist for the Confederation of Oregon School Administrators, says the ballot measure is a brilliant way for Stand for Children to build political goodwill. "It is very attractive politically," he says.

Very attractive to everybody except the one organization that matters most in any discussion of K-12 funding: the Oregon Education Association, the 45,000-member statewide teachers' union, which opposes it.

"The way the details of Measure 98 are written could prevent local communities from deciding what's best for their students, whether they need more community programs, or language and reading support, or parental engagement programs, or substantially smaller classes, or more counselors," OEA lobbyist Trent Lutz said in a statement. He calls it an unfunded mandate.

It's true that Measure 98 does not include any funding—but Fick points out that her measure states that it would only be funded after the state budget grows by more than $1.5 billion. That means, she says, it will be funded with new money not currently allocated to existing programs.

But Measure 98 still eats into OEA's control of school funding, because it reduces local control.

State Rep. Margaret Doherty (D-Tigard), a former teacher and OEA staffer who chairs the House Education Committee, dislikes Measure 98 and is suspicious of Stand for Children's donors.

"Their funders are among the biggest proponents of charter schools and online education," Doherty says.

The group earlier took a strong position in Oregon on the hottest of hot-button issues for teachers. In 2013, Stand for Children was a key part of a group called the Fix PERS Now coalition, which forced $4 billion in cuts to public employee retirement benefits (the Oregon Supreme Court later invalidated most of those cuts). But that effort was mostly behind the scenes.

This year, Stand for Children has stepped into the open to form a relationship with voters, although the true source of the cash funding Measure 98 remains a mystery.

Stand for Children has contributed nearly $3.5 million of its own money to Measure 98, making the nonprofit the largest single donor to any Oregon campaign this year.

It's impossible to know exactly where that money is coming from, however: The Stand for Children entity that contributed the money is organized as a 501(c)(4) tax-exempt organization, which means it can make unlimited political contributions but does not have to identify its donors.

Tax returns and news reports show that Stand for Children has previously raised money from the Bill & Melinda Gates Foundation, the Walton Family Foundation, and many hedge fund and private equity tycoons. Billionaire Michael Bloomberg's eldest daughter, Emma, served as chairwoman of the group's national board.

Those billionaires and foundations are critical of teacher tenure and seniority rules, while supporting greater school-choice options, including charter schools. Measure 98, with its mandate for shop class and college-prep programs, fits with that mission to reduce the power of teachers' unions.

For years, the teachers' union has been among the biggest contributors in Oregon Democratic politics. But this election, OEA is otherwise occupied: It has contributed $3.3 million to the Yes on 97 campaign.

State Rep. Mark Johnson (R-Hood River), chairman of the Hood River County School Board and a Stand for Children ally, says he thinks the nonprofit is seeking to prove it can win even in a state where organized labor holds sway.

"In Oregon, we have one of the strongest teachers' unions in the country," says Johnson, who received a $15,000 contribution from Stand for Children this year. "[Stand] wants to do something significant here that they can build on in other states."

Oregon's ballot measure system has always made it a fertile testing ground for big ideas.

From 1990—when Measure 5, the property tax limitation measure, passed—until the early 2000s, Oregon's ballot measures were chiefly the province of conservatives such as anti-taxer Bill Sizemore and Kevin Mannix.

Our Oregon rose up in response to their policies, first as a defense mechanism but later, especially with Measures 66 and 67 and now 97, as a vehicle for generating new tax revenue.

It's too soon to say for sure, but if Measure 97 does sink beneath the onslaught of Mandabach's assault, and Measure 98 passes easily (as polls say it will), the dynamics could change again.

Business executives and education activists could become the next generation to decide they'll make public policy the Oregon way: at the ballot box.

"Folks in our coalition have seen how difficult the path is through the legislative arena," Stand for Children's Fick says. "We believe it's a crisis and so it was time to go talk directly to the people."

Willamette Week