By JONATHAN J. COOPER
SALEM, Ore. (AP) -- Gov. John Kitzhaber acknowledged Monday he's asking state lawmakers to make politically risky decisions on public pensions and prisons but said tough choices are needed to shrink class sizes and improve education.
The Democratic governor delivered his annual state of the state speech to a joint session of the new state House and Senate after lawmakers took the oath of office. He reiterated themes he's emphasized since unveiling his budget proposal in late November.
Projected prison growth will cost hundreds of millions of dollars that could otherwise be spent on educating children and keeping them from turning to crime, Kitzhaber said. A commission he created has proposed rolling back mandatory minimum prison sentences for certain crimes, among other changes.
"I recognize, as all of you do, that the politics around any type of public safety reform are difficult," the governor said. "But I am asking you ... to find the courage and the honesty to recognize that if you are unwilling to act on this issue we will, by default, be choosing prisons over schools."
Kitzhaber has also proposed capping cost-of-living increases that retired government workers get each year. The higher costs of pensions for retired teachers will make it hard to improve education even as spending increases, he said.
Kitzhaber also said he's open to raising taxes on higher-income taxpayers by capping the amount of money they can claim in tax deductions.
"I am prepared to work with you to pursue opportunities boosting revenue," Kitzhaber said.
The economic recovery has lowered the unemployment rate and helped restore prosperity for some Oregonians, Kitzhaber said, but those gains haven't extended to rural communities, minorities and the poor.
"The word 'recovery' is warped if it is used at a time when the unemployment rates for white Oregonians are falling, but for African Americans, Native Americans and Latino Oregonians unemployment is rising," Kitzhaber said. "The word 'recovery' is the wrong word to use for a state with a 24-percent child-poverty rate."
Kitzhaber's audience included more Democrats than it did when he returned to the governor's office to begin his third term in January 2011. The November election gave Democrats control of the state House after two years sharing power with Republicans.
Lawmakers adopted rules and elected leaders but won't formally begin the legislative session until Feb. 4.
Democrats now have a solid 34-26 majority in the House. Rep. Tina Kotek, of Portland, was elected speaker, becoming the first lesbian to lead a state legislative chamber in the United States. She took the oath of office alongside her partner, Aimee Wilson.
Kotek urged her colleagues to listen, not to be afraid of different perspectives and not to shy away from robust but constructive debates.
"All the voices need to be heard, from the most vulnerable to the most well healed, if we are to meet our moral obligation to represent and serve all Oregonians," Kotek said.
Democrats also retain control the state Senate with a slight 16-14 edge. Sen. Peter Courtney, of Salem, was elected to a sixth term as Senate president -- a position he's already held longer than anyone else in Oregon history.
Lawmakers will have a busy calendar when they return next month to formally begin their business.
The economy has stabilized, avoiding the massive budget deficits that lawmakers have faced in recent years. But the costs of providing government services are rising faster than tax revenues, and the Legislature will still have to cut millions in spending to arrive at a balanced budget.
Kitzhaber has pushed lawmakers to cut back on pension benefits for public employees and to reduce spending on prisons. He said both ideas would free up money for higher priorities like schools and police. But they're politically risky for some lawmakers who were elected with strong support from public-employee unions or fear being portrayed as soft on crime.
Lawmakers also will confront environmental issues, transportation funding and immigration issues.
Copyright 2013 The Associated Press.