Democrats picked up four seats in Oregon’s House, breaking a 30–30 deadlock (and making Tina Kotek the first openly lesbian speaker in any legislature in the U.S.). A Democratic governor and Democratic Legislature now confront $16 billion in unfunded liabilities in a Public Employee Retirement System that has lost 27 percent of its value since the recession began in 2008. Democrats couldn’t have taken back the House, or defended a 16–14 Senate majority, without the support of public-employee unions.

And the PERS reforms that Governor John Kitzhaber has proposed are not going to please union leaders who are protective of hard-won benefits. Limiting annual cost-of-living increases to retirees receiving less than $26,000 a year. Eliminating or restricting employers’ “pickup” of employees’ contributions to PERS. Restricting the annual state-income-tax allotment to retirees residing in Oregon and paying state income taxes (the least objectionable to union leaders).

Yet reform is inevitable. State agencies and schools will spend $3 billion on pensions in the next two-year budget cycle, up 45 percent from current outlays that include a $1.1 billion increase in this biennium. Kitzhaber has linked the reform of PERS to public education reform: hiring teachers, adding days previously cut from the school year, and restoring art, music, and vocational classes won’t happen if schools have to feed an insatiable retirement fund. He has also defined what he won’t do. “If this gets ugly, if people try to make this into something about public employee bashing, I’m gone,” Kitzhaber told The Oregonian.

Also in this issue: Governor John Kitzhaber’s Second First Term.