Raising dire concerns over an Oregon economy that just a few weeks ago looked strong, state officials on Wednesday urged quick action from state lawmakers to help address the coronavirus crisis.
“Today I am sounding the alarm,” Nik Blosser, chief of staff to Gov. Kate Brown, told lawmakers on a committee convened to address the spread of COVID-19. “Our needs will far outweigh our resources.”
Precisely how the state economy will be impacted by the layoffs, business closures, and other drastic changes forced by the pandemic remains to be seen. State economists aren’t expected to release a snapshot of their expectations until May 20.
But Blosser told lawmakers what in recent days has seemed a foregone conclusion: Compared to the extremely strong revenues Oregon has posted again and again in recent years, that analysis is likely to represent a “sea change.”
The caution came as lawmakers met for the first time, in what is expected to be a weighty and fast process for determining how they might help Oregon respond to the current crisis.
The committee was convened by House Speaker Tina Kotek and Senate President Peter Courtney last week. It’s tasked with identifying budgetary and policy steps the Legislature might enact in an expected short session in order to address COVID-19 and its impacts.
Among possible recommendations by the committee: short-term support to workers and small businesses unable to make money because of new restrictions in place, and statutory changes that help the state act to address the public health crisis.
Questions raised at the hours-long meeting far outpaced answers. They included how bad the news for Oregon’s economy will be, how to best help people remain in their homes, how to assist workers who’ve been laid off and help businesses remain viable, and how to ensure the state’s healthcare system has the supplies and capacity to treat the sick.
Many of those questions are being pursued by Brown’s administration and the federal government.
“Our job is to look at policy and pass those policies through bills that allow us to get roadblocks out of the way of the executive branch,” said state Sen. Arnie Roblan, D-Coos Bay, a co-chair of the committee. “We are also the budget of the state. We know that not only is this an economic disaster currently… but we’re going to have to recover from it.”
Officials from the governor’s office, labor unions, business groups and the state’s public health department all made presentations to the committee, in a dizzying litany of the many challenges Oregon faces.
Not only have workers been laid off in large numbers since Brown largely closed restaurants and bars, but overwhelming demand on the federal level has created difficulties in filing for unemployment.
Not only are healthcare workers around the state bracing for the impact of hundreds of new patients seeking care for the disease COVID-19, but they are quickly running out of the protective equipment that helps ensure they themselves aren’t infected.
Businesses shuttered or hampered because of the virus are in serious jeopardy of closing altogether. Laid off workers throughout the state risk eviction.
Added to all of those factors, the state is likely to have far fewer resources to offer help than it was expecting. Video lottery terminals around Oregon have gone dark, likely resulting in tens of millions of dollars in lost revenue. The lottery represents the state’s second highest source of funds, after income taxes.
Further impacts could be felt on the state’s income taxes and other resources, though state economists say they won’t know what that looks like for weeks.
“We can’t really talk numbers yet because we don’t know,” said Josh Lehner, an economist with the state’s Office of Economic Analysis. But Lehner noted that state resources are currently highly connected to consumer spending, particularly after the state passed a new tax on business sales last year to pay for education.
“I have seen some folks talk about how bad it will be for sales tax states, and that is right, but that doesn’t mean it won’t hurt Oregon revenues as well,” Lehner wrote in an e-mail. “Job loss leads to lower income taxes, stock market declines do too, but also the drop in consumer spending will impact Oregon revenues.”
The true scope of the problem likely will not be known until the Office of Economic Analysis releases an updated revenue forecast on May 20. That outlook will offer an idea of how much the crisis is expected to eat into the $1.1 billion ending balance that lawmakers have been told to anticipate when the current budget cycle closes.
The result will have impacts on how much lawmakers can spend on battling the virus — and state services in general.
“We know there will be a slowdown in the data, but all of the data that we have to date indicates everything is fine,” said Chris Allanach, the Legislature’s top revenue officer. “How things unfold in the next couple weeks will kind of determine it.”
Lower revenues come at a time when state spending might be most necessary, a factor that has Oregon intensely interested in a federal stimulus package being taken up in Congress.
“That is going to be critical,” said Christian Gaston, a workforce and labor policy advisor in the governor’s office. “Our state resources decline in a recession at the same time our demand for essential services increases.”
It’s not yet clear that Oregon will definitely enter a recession, but it has become increasingly likely as the effects of the pandemic — and the social distancing measures being employed to help stop its spread — have taken root.
At every turn Wednesday, lawmakers on the coronavirus committee were met with worry and gloomy prognostications.
Sandra McDonough, CEO of Oregon Business Industry, told the committee that the pain of the pandemic was being felt by businesses in all locales and sectors.
“I would say that our small businesses have been devastated and the level of fear they’re expressing is more than anything I heard in [the Great Recession],” McDonough told lawmakers. “We are very concerned that these businesses might end up going down and never coming back.”
The sentiment was mirrored by representatives of the Oregon Restaurant & Lodging Association, which said it had no idea how many establishments will close for good following a March 16 executive order banning in-establishment dining at bars and restaurants.
ORLA President and CEO Jason Brandt told lawmakers that the impact of the coronavirus outbreak on industry jobs and hotel room occupancies has been “greater than 2008 and 9/11 combined.”
Business groups recommended that barriers to unemployment insurance for laid off workers be eliminated, and that the state consider delaying collection of a new commercial activities tax on businesses for one quarter, suspend payroll taxes for small businesses, and provide tax credits and state grants.
Lawmakers also got bad news from Patrick Allen, director of the Oregon Health Authority, who walked them through an expected shortage in healthcare resources that threatens to create havoc when the scope of the pandemic becomes more clear.
“We’re in the initial stages of what’s expected to be an unprecedented health care crisis,” Allen said. “This will last for months, and potentially a lot of months.”
In recent days, Allen and Brown have announced that the state is looking to expand hospital capacity and preserve the state’s limited hospital beds in anticipation of an influx of need. Allen told lawmakers that the state’s existing hospital resources might be fully used up “in the next short weeks.”
Allen also laid out the state’s issues with obtaining personal protective equipment, or PPE, which is necessary to help healthcare workers safely treat patients. Allen said the state had been “burning through” its existing resources, but was not having much luck getting more through existing supply chains or the federal government.
If that doesn’t change, he said, “I am very concerned in the next few weeks we will see the need of providers to treat people without masks. That is a critical problem.”
Exactly how all of this translates into legislative ideas remains to be seen.
Beyond relief for businesses and easier access to unemployment and workers’ compensation, lawmakers appear likely to consider an eviction moratorium similar to one enacted in the Portland area, and direct subsidies to renters and mortgage holders in danger of falling behind on their payments.
“We know this work is going to have to move fast and won’t be easy,” said Elana Pirtle-Guiney, the governor’s legislative director.
It’s also unclear when legislative action might happen.
Following the early end to this year’s regular legislative session, top Democrats had said they would push for a special session to tend to unfinished business. That idea appears to have been put off by the coronavirus scourge that has overwhelmed the state in the past two weeks.
Instead, a session Gov. Brown has said she’ll call in coming weeks will convene with the express purpose of passing an “emergency response package that will address the statewide impacts on families, workers and businesses,” legislative leaders from both parties said in a statement Monday.