Democrat John Kitzhaber was whittling down a slim lead by Republican Chris Dudley as the last ballots were being counted statewide in the race for governor.

Democrat John Kitzhaber was whittling down a slim lead by Republican Chris Dudley as the last ballots were being counted statewide in the race for governor.

Most of the remaining ballots were in Multnomah County, where Kitzhaber was heavily favored among the large Democratic majority in Portland.

With nearly 1.3 million ballots counted, Dudley had just over 49 percent while Kitzhaber had a little over 48 percent of the vote.

But roughly one-fourth of the Multnomah County ballots had yet to be counted by 9 a.m. Wednesday, and Kitzhaber was outpacing Dudley by nearly 3-to-1.

The former two-term governor Kitzhaber and the political rookie Dudley have spent a combined total of at least $15 million on their campaigns this year.

Pacific University political science professor Jim Moore said a sluggish turnout by independents hurt Dudley, because those independents tend to vote Republican. This year's governor's race is one of the closest in recent history, Moore said, and could mirror other state and national elections in which Democrats eked out victories by narrow margins.

"The common thread it shows is that Oregon is an evenly divided state in terms of party identification," Moore said. "The rest of the nation looks at Oregon and says it's blue, blue and bluer, but it's actually pretty equally divided."

Democrats hold a 200,000 voter-registration advantage over Republicans in the state, but independent voters make up about 20 percent of the electorate.

"A big number of unaffiliated voters are sitting this one out, and that hurts Dudley," Moore said.

Whoever wins will face a tough task after the victory celebration — how to make wrenching changes in Oregon's state government and schools.

The state faces a budget gap expected to be as much as $3 billion when the Legislature begins writing a new budget next year.

Democratic Gov. Ted Kulongoski, leaving office after the two straight terms allowed by Oregon law, has described Oregon's budget situation as heading for a cliff.

Twice this year, as state finances deteriorated, he's called for across-the-board budget cuts that have resulted in teacher layoffs and a prison closing. He and a board of advisers have said sterner measures will be required next year.

Neither candidate has been willing to thoroughly describe what sort of changes Oregonians could expect and how wrenching they would be.

Dudley's campaign centered on cutting business taxes. He said investors lack confidence in Oregon because of business tax increases the voters approved in January, and that lack of confidence has contributed to the state's weak recovery from the Great Recession.

Kitzhaber's campaign focused on "systems changes," for example, redesigning the state's education system under one governing body from preschool through postgraduate, and setting the state on a 10-year budget cycle.

Dudley argued that Kitzhaber had his chance in the 1990s as governor, and it didn't turn out well: The state economy went into a tailspin at the end of his tenure, and Kitzhaber described Oregon as "ungovernable" because of excessive partisanship and the lack of flexibility imposed by initiated measures.

— The Associated Press