Gov. Kate Brown is sticking it to Republican legislator Sal Esquivel.

But he stuck it to her first.

Or something like that. It’s sort of like the letter of the law vs. the spirit of the law.

In the dark comedy that has become the 2017-19 state budget, Democratic Gov. Brown announced her intention to veto state funding for three projects in the Medford area, which Esquivel represents in the Oregon House.

Esquivel and House Republicans had made a deal with House Democrats during the 2017 Legislature. He would be the one Republican voting for the health care provider tax, thereby achieving the supermajority required for its approval in the House. Democrats are counting on the expanded tax to pay for the Oregon Health Plan. Esquivel was a logical choice to provide the Republican vote, because he’s not seeking re-election in 2018 and doesn’t have to worry about his vote being used against him at election time.

He got a lot in return. The House Democratic leadership agreed to scuttle what Esquivel called several “very atrocious anti-business bills” and, most important, a bill that would have created a panel to update Oregon’s use of advance directives — also known as living wills. Esquivel despised Senate Bill 494, which he called the “death panel bill.”

This deal was a way for Esquivel to have an impact. The House Democratic leadership had shot down several of his bills, including ones to create a state sales tax, make English the official language of Oregon and block municipalities from becoming “sanctuary cities” for undocumented immigrants.

Along with killing several bills, Esquivel gained the promise of state funding for several projects in Southern Oregon.

Except Gov. Brown now says she’s going to veto $1 million for the historic Holly Theatre in Medford, $750,000 for a stadium roof at Harry & David Field, and $1.8 million for the Bradshaw Drop Irrigation Project.

Esquivel is livid. He says he lived up to his end of the bargain.

On the other hand, Brown is vetoing that funding on the grounds that he violated the spirit of the bargain. He voted for the health care tax, but he later joined Rep. Julie Parish, R-West Linn, in seeking to force a public election on that tax. (If they gain enough voter signatures for that referendum, a special election will be held in January under a bill engineered by legislative Democrats.)

Brown issued an opaque statement that avoided mentioning either Esquivel or the actual legislative bargain: “The cornerstone of all negotiations[,] whether they occur in a public or private arena, is the implied covenant of good faith and fair dealing.

“I believe that each of these projects should be considered during the 2018 session to be evaluated on their merits.”

In response, Esquivel urged his constituents to contact the governor’s office: “She certainly reigns queen when it comes to singling out one Representative that works for his district and the State of Oregon and doesn’t take his orders from her or the present leadership. I gave them what they asked for — Brown needs to hold up her end of bargain.

“I don’t ask much of my constituents — but I am asking now. Please call her office, email her and inundate her office with statement[s] on how unfair this is to Southern Oregon. How dare she punish the entire region because she cannot manipulate a representative.”

Esquivel said he had made no promises beyond voting for the health care provider tax in the House. Supporting Parrish’s initiative petition is a way to let Oregonians vote on whether they want their tax dollars paying for such social issues as “free full term abortions for anyone in the state” and full health coverage for children who are not legal residents.

• And other veto news: Rep. Esquivel noted that Gov. Brown does not plan to veto $110 million for a new courthouse in Multnomah County, $400,000 for the Greater Portland YMCA or money for certain other projects.

However, Brown did say she would veto funding for the SW Capitol Highway road project in Portland — an area represented in the Legislature by Democrats. Brown said that project should have been considered in the massive state transportation-finance bill, not separately.

• A political death watch comes to an end: Lynne Saxton‘s public apology was not enough to save her job as director of the Oregon Health Authority. Gov. Brown met with Saxton on Tuesday afternoon and agreed she should resign.

Saxton’s ouster came as little surprise. A common sentiment around the Oregon Capitol was, “Everybody knows she’s been on death watch for months now.” Legislators were frustrated with the agency over its medical-marijuana regulations, ineligible people gaining insurance through the Oregon Health Plan, a perceived agency “culture of trying to hide things” and other issues.

Saxton’s departure seems like karma. The agency has been in a very public — and litigious — fight with FamilyCare Health, a Portland-based health care nonprofit. Neither Saxton nor FamilyCare CEO J eff Harrington would back down.

As a journalist, I was surprised by the aggressive tone of OHA’s press releases about its dispute with FamilyCare. Then last week, the Portland Tribune broke the story that the OHA mulled planting negative news stories to hurt FamilyCare’s reputation and thus dissuade the Legislature from involving itself in the ongoing legal dispute.

• Kudos for Brown: Gov. Brown has had to replace a number of state agency administrators — some more than once after bad hires by her administration. In this case, Saxton was nominated as OHA director by then-Gov. John Kitzhaber. Brown continued the nomination after taking over as governor two years ago.

Saxton is the spouse of former Republican gubernatorial candidate Ron Saxton. Both Saxtons served on Kitzhaber’s transition team when he returned as governor for a third term.

• Not the Oregon way: Every legislator I talked with was stunned that an Oregon government agency would consider a covert, negative public relations campaign. State Sen. Jackie Winters, a Salem Republican who’s been around state government and health care issues for years, said it resembled the shenanigans of Washington, D.C. — not the Oregon way of doing government business.

In an email from a family vacation in Illinois, state Sen. Laurie Monnes Anderson, D-Gresham, told me: “It is most important that eligible Oregonians are getting the health care they are entitled [to]. It is disheartening to have agencies and contractors in dispute when the ultimate goal is to make sure that Oregon has a good, efficient and accessible health care delivery system.”

OHA emails quoted by the Portland Tribune showed that Saxton had praised the draft communications plan, which included finding a HIV patient to who could complain about FamilyCare to the media.

In contrast to those OHA emails, Saxton on Monday told me the proposal was shelved immediately: “The agency has not, would not, will not plant stories. … The draft had some ideas we knew were never to be considered.”

• Saxton’s first letter to OHA employees: This is the letter that Saxton sent Tuesday afternoon to the Oregon Health Authority staff:

Yesterday I sent a letter of apology to each of Oregon’s 16 coordinated care organizations (CCOs), starting with FamilyCare.

As you may know, the Portland Tribune recently published excerpts from a January 2017 draft communications plan drafted by OHA staff, which was developed in the heat of a prolonged legal dispute. In the draft, our staff proposed sharing negative information about FamilyCare with the media. FamilyCare is one of 16 coordinated care organizations OHA contracts with to provide Oregon Health Plan members access to health services. This was not in any way supported by OHA leadership. Those parts of the plan were inappropriate. It was shelved.

Let me be clear, the strategies proposed in the draft plan were not appropriate for OHA or any state agency. I want OHA employees to know the ideas in this draft plan were not acted on in any way. No OHA staff sought to pitch negative stories to media about FamilyCare. These ideas were shelved in their draft form because they weren’t in keeping with how we conduct ourselves at OHA, or how we intend to defend the integrity of Oregon’s CCO rate-setting process in the course of ongoing litigation.

Like any organization, OHA is made up of people who can make mistakes, as our staff did when they were thinking out loud in the midst of an adversarial litigation process. I hope Oregonians will judge OHA by our actions, not ideas never pursued.

I’m proud of what OHA has accomplished working with all of Oregon’s 16 CCOs. Oregon has become a national model for health reform due to the collaboration between OHA and the CCOs that serve approximately 1 million Oregon Health Plan (OHP) members (about one in four Oregonians). Together we have improved the quality of care OHP members receive, produced better health outcomes, and lowered taxpayer costs. I am committed to making sure OHA continues to work with all of our CCOs in a professional manner, equitable to all CCOs.

I have instructed our staff to refrain from any communications planning that exceeds the boundaries of a state agency’s responsibility to the public trust. I have also asked the Attorney General’s Office to train our staff on DOJ’s application of attorney-client privilege for state agencies. OHA staff erroneously believed that due to the ongoing litigation, it was appropriate to seek advice from the Attorney General.

It’s the obligation of each one of us, especially myself, to earn the public’s trust each day. I regret this mistake and the way it reflects on our agency’s mission and staff. However, we will learn from this experience and continue to advance professionalism throughout our culture. I appreciate all you do to improve the health of the people of our state. Thank you!

And the follow-up

Lynne Saxton sent this announcement to OHA staff on Tuesday evening:

After nearly three years leading the Oregon Health Authority (OHA), I wanted to let you know that I submitted my resignation to Governor Brown today. OHA has a vital mission: to protect and improve the health of all Oregonians. Nothing should distract us from advancing that mission, because nothing is more important than the well-being of the people of our state. I decided that stepping down would give OHA the best opportunity to stay focused on delivering the essential health services we provide to Oregonians and continuing to transform our health system to provide better care, better health and lower costs.

My resignation is effective Aug. 31, 2017. Over the course of my remaining weeks I will be focused on ensuring a smooth transition of agency leadership and continuing to deliver on OHA’s key priorities.

I want to thank Governor Brown for the opportunity to lead OHA and be at the forefront of Oregon’s nationally-recognized health reforms.

I am grateful for the opportunity to have served with all of OHA’s committed staff. I’m proud of what we have accomplished together on behalf of our state. Through the hard work of teams across our agency, we tackled difficult challenges, which included:

renewing Oregon’s innovative Medicaid waiver and sustaining our transformation system of coordinated care;

developing sustainable, federally-approved Medicaid rates for each of the past 3 years;

launching the ONE eligibility system so Oregonians could apply and renew Oregon Health Plan benefits in a simpler, easier and more reliable way;

partnering with the US Dept. of Justice to develop a plan to reduce the institutionalization of people with serious mental illness;

improving access to coordinated care for members of Oregon’s 9 federally-recognized tribes;

laying the groundwork for the much-needed modernization of Oregon’s Public Health system;

and serving Oregon’s nearly 4 million residents each day.

Thank you for your service and for everything you do to make Oregon healthier.

D ick Hughes has been covering the state’s political scene since 1976. Contact him at TheHughesisms@Gmail.com or follow him at Facebook.com/Hughesisms.