I got it working, though I'm not sure which modification solved the problem. SRT_KP might be right after all about the datasource since I added some properties to it (maxactive, maxidle, validationquery). I switched to LocalSessionFactoryBean since I'm using xml mappings and added the mapping file suffix to the mappingLocations property. I also moved @Transactional to the service layer where it belongs.
Here's what I ended up with:
<?xml version="1.0" encoding="UTF-8"?>
<beans xmlns="http://www.springframework.org/schema/beans"
xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
xmlns:context="http://www.springframework.org/schema/context"
xmlns:mvc="http://www.springframework.org/schema/mvc"
xmlns:tx="http://www.springframework.org/schema/tx"
xsi:schemaLocation="http://www.springframework.org/schema/beans http://www.springframework.org/schema/beans/spring-beans-3.1.xsd
http://www.springframework.org/schema/context http://www.springframework.org/schema/context/spring-context-3.1.xsd
http://www.springframework.org/schema/mvc http://www.springframework.org/schema/mvc/spring-mvc-3.1.xsd
http://www.springframework.org/schema/tx http://www.springframework.org/schema/tx/spring-tx-3.1.xsd">
<context:property-placeholder location="classpath*:WEB-INF/*.properties"/>
<context:component-scan base-package="org.base.to.scan">
<context:exclude-filter type="annotation" expression="org.springframework.stereotype.Controller"/>
</context:component-scan>
<bean id="sessionFactory" class="org.springframework.orm.hibernate3.LocalSessionFactoryBean">
<property name="dataSource" ref="oraDataSource" />
<property name="mappingLocations" value="classpath*:org/path/to/mapping/files/*.hbm.xml" />
</bean>
<bean id="oraDataSource" class="org.apache.commons.dbcp.BasicDataSource" destroy-method="close">
<property name="driverClassName" value="oracle.jdbc.driver.OracleDriver" />
<property name="url" value="${jdbc.url}" />
<property name="username" value="${jdbc.username}" />
<property name="password" value="${jdbc.password}" />
<property name="maxActive" value="10" />
<property name="maxIdle" value="5" />
<property name="validationQuery" value="SELECT 'x' FROM dual" />
</bean>
<tx:annotation-driven/>
<bean id="transactionManager" class="org.springframework.orm.hibernate3.HibernateTransactionManager">
<property name="sessionFactory" ref="sessionFactory" />
</bean>
BTW great tutorial: http://www.byteslounge.com/tutorials/spring-with-hibernate-persistence-and-transactions-example