The Curry Coastal Pilot

SALEM - Compared with two years ago, when the state faced a $3.5 billion revenue shortfall and the uncertainty of a historic 30-30 split in the House, the state is on the right track, Gov. John Kitzhaber said in his 2013 State of the State address Monday. But tough political decisions still remain.

Lawmakers, the governor said, must tackle the state's pension system this legislative session and curb costs associated with the state's prison system. They should cast a critical eye toward the state's tax expenditures and continue to push for health care reforms.

All of these will help another goal: funneling more money into schools.

"We have come a long way since 2011, and we should celebrate our progress because we did it together, and it did not come easy," Kitzhaber said.

But in order to reinvest in the classroom and put money toward other public services, "we need to make room in our current budget," he said.

Kitzhaber, who was elected for an unprecedented third term in 2010, acknowledged the difficulty of making changes to the state's prison and pension systems.

On prisons, he noted, all lawmakers fear the dreaded 'soft on crime' label.

"But I'm asking you to find the courage and the honesty to recognize that if we are unwilling to act on this issue we will, by default, be choosing prisons over schools," he said.

The governor is pushing to keep nonviolent offenders out of prison beds, putting more money toward community correction programs.

On changes to the state's pension system, he made it clear it was not an attack on teachers.

"It is not about the value of our public employees," he said.

The governor has proposed capping the cost-of-living adjustment for the Public Employees Retirement System, among other changes.

"It is simply about trying to have a conversation that allows us to strike a balance between the cost of our retirement system and our ability to put dollars in the classroom today to ensure that our students are successful tomorrow," he said.

The governor also said lawmakers must focus on job creation and economic recovery, especially in rural areas. It's not a "recovery," he said, if only the Portland metro area sees a decline in unemployment.

Not while "rural Oregon continues to suffer the economic and social consequences of double-digit unemployment, outdated infrastructure and an aging workforce."

Lawmakers also formally voted Monday to elect Rep. Tina Kotek, D-Portland, as speaker of the House. Kotek is the nation's first openly lesbian speaker.

Rep. Mike McLane, R-Powell Butte, was elected to serve as House Republican leader.

On the Senate side, Sen. Peter Courtney, D-Salem, will set a record for serving his sixth consecutive term as Senate president. Sen. Diane Rosenbaum, D-Portland, remains the Senate majority leader and Sen. Ted Ferrioli, R-John Day, the Senate Republican leader.

The governor's State of the State speech kicked off the start of the 2013 Legislature. However, after Monday's ceremonies, lawmakers will spend two days organizing and then won't return to the Capitol until Feb. 4, when the session starts in earnest. Democrats have control of both the upper and lower chambers, with a 16-14 edge in the Senate and a 34-26 majority in the House.