1986 election and first term

McKernan as governor.

McKernan and his wife, U.S. Senator Olympia Snowe, at a holiday reception at the White House in 2002.

Before the 1986 election, no Republican had occupied the Blaine House in two decades. Incumbent governor Joseph E. Brennan was term limited and could not run again. McKernan immediately declared his intention to run for governor, and Brennan declared his candidacy for McKernan's old congressional seat in the first district (which he would eventually win).

His opponent was James E. Tierney, former Majority Leader of the Maine House and state Attorney General – though he did also face two independent candidates, Sherry Huber and John Menario. He based his campaign on better schools and better jobs, believing them to be the keys to making Maine (in his words) "the very best place in America to live, to work and to raise a family." He pledged to pursue both goals without a major tax increase. Additionally, McKernan focused on economic development, claiming that Maine can become what he dubbed "the opportunity state".^[2] After a spirited campaign, McKernan emerged on top, besting Tierney by a nine-point margin. However, McKernan received only 39% of the vote in a divided four-way race.

McKernan, just 38 years old on inauguration day, was welcomed with a $46-million surplus. That good financial news would be short-lived, however, as the state would face a number of fiscal challenges in the coming years.

In his first tenure in Augusta, McKernan attempted to grow the Maine economy. He helped initiate a $1.35-million fund to create "centers of innovation," designed to position Maine at the cutting edge of the next technological change. He also worked to expand job training programs, structured to enable the state to quickly change the skills being taught to meet the needs of a new employer. An additional $5.9-million state investment in the University of Maine System was also spearheaded by the governor, intended to enhance its educational and research reputation. These efforts were hammered home with the governor's new economic development slogan: "MAINE: We're America's Future Business." The program created "opportunity zones" throughout the state to draw jobs to areas in need of new or additional industry.^[3]

In his second year in office, Governor McKernan launched a public relations campaign intended to enhance the state's image as a place to do business.^[3]

For all the work to develop Maine's economy, McKernan also faced a number of difficulties which stunted his efforts. Budget shortfalls began to run rampant toward the end of his term, and legislative battles with opposition Democrats became frequent. The relationship between longtime Speaker of the House John L. Martin and McKernan was poisonous, and the two had difficulty resolving differences over the state budget. The Governor crafted a plan to eliminate or reduce welfare and job-training benefits for thousands of low-income Mainers, while Martin and the Democrats fought to keep funding at a higher level.^[4]

The difficult budget fights between the governor and the legislature would prove to be a major issue in McKernan's effort to be re-elected.

1990 election and second term

During his announcement for his re-election campaign, McKernan listed as important successes growth management initiative, a trash reduction and recycling program, and a plan to remove the Kennebec River dam in Augusta by the end of the 1990s. McKernan credited his administration with taking decisive action against illegal drugs, citing the creation of the Bureau of Intergovernmental Drug Enforcement. Troubled by difficult financial issues, McKernan reiterated his claim that Maine has responded to budget difficulties with less impact on taxpayers than other states in the New England region. McKernan pointed out that Maine was the only state in the Northeast that has a balanced budget and that did it without raising taxes.^[5] – Polling in May 1990 showed former governor Joseph Brennan with a 9-point lead over the incumbent governor. McKernan felt that the erosion of his support occurred during the legislative budget battles, and would be reversed in the months before the election, believing that the situation would improve as the state budget continued to hold further into the fiscal year.^[6]

The race was so close that the candidates waited until shortly before noon the following day before summoning reporters to make acceptance and concession remarks. Brennan acknowledged that voter margins in his traditional strongholds in southern Maine weren't enough to offset McKernan's strength in rural and northern Maine.

McKernan has characterized his narrow victory as something of a comeback, considering that pollsters showed him 12 points behind Brennan only two months prior. Momentum began to change only in mid-October, McKernan said, when his campaign was able to effectively communicate "not only what we had accomplished but also what was at stake in this election." Brennan said that he saw no fatal flaws in his campaign, but added he was hurt by the long federal budget debate that kept him in Washington when he needed to be campaigning in Maine. "It hurts the dynamic of the campaign when you can't be here," he explained.^[7]

McKernan's second term became defined by partisan battles with the state legislature's Democratic majority over fiscal management, given a large budget deficit and a constitution that prohibited borrowing to offset budget gaps. He threatened to invoke a 1976 law permitting the governor to make "fair and equitable" spending reductions to comply with the state's balanced-budget mandate. His specific controversial actions included drafting plans to cut spending unilaterally and rewriting rules to give state agencies more discretion in how they allocate their reduced funds. Democrats objected and took McKernan to the Maine Supreme Judicial Court, but the court upheld the governor's authority to take such action.^[8]

McKernan also battled with Democrats about state workmen's compensation costs, eventually settling with them for a roughly 26% decrease in spending.^[9]