Oregon lawmakers are holding a series of virtual informational hearings, many of them addressing the fallout from the COVID-19 pandemic. Meanwhile, legislative leaders continue to debate when to go into special session, which may depend on whether and when Congress acts on a fourth major coronavirus emergency relief measure.
The virtual hearings, which replace quarterly Legislative Days, generated some sparks last week as Oregon Employment Department officials tried to explain a backlog of unemployment insurance claims. The House Interim Business and Labor Committee, which was unable to ask questions because of the length of the explanation, called back Employment Department officials for a rare Saturday session.
Employment Department officials held a press briefing Saturday to apologize for delayed benefits to as many as 200,000 Oregonians, while explaining the agency and its outdated computer system was overwhelmed by a surge in almost 450,000 unemployment insurance claims. During the hearing, Erickson said 217 staff members took paid sick leave and another 86 took other paid leave. “We hear your frustration,” she told lawmakers. “We simply don’t have enough people to answer the phones.…That is a failure on our part.” Asked why she hadn’t sought private-sector help, Erickson said existing regulations prohibit it.
Meanwhile, Oregon Senator Ron Wyden took the unusual step of calling on Erickson to resign. “Simply put,” he said, “this litany of incompetence and unresponsiveness has hit the breaking point.” Rep. Jeff Barker, D-Aloha, echoed Wyden’s call for new leadership at the agency. Over the weekend, Governor Brown sacked Erickson and appointed an interim director.
The House Interim Judiciary Committee last week listened to business leaders express concern about a spate of lawsuits they anticipate from workers exposed to the virus who may allege workplace negligence. Senate interim committees and joint committees will hold their virtual hearings this week.
The indecision over a legislative special session date centers on money – or the lack of it. The latest quarterly economic report projected a $2.6 billion shortfall for the current biennium, which ends June 30, 2021. The shortfall could be as large as $5 billion in the next biennium.
State officials are sitting on nearly $2.6 billion in reserve funds, which Governor Brown wants to preserve to soften the blow in the 2021-2023 biennium. Whether Democratic legislative leaders agree with Brown depends on congressional action. The Democratically controlled House has passed legislation to provide $500 billion to backfill lost revenues by state and local governments. Republican Senate Majority Leader Mitch McConnell has poured cold water on immediate action and on many of the provisions in the House bill, including extension of federal unemployment benefits. McConnell has insisted on liability protection provisions in any additional emergency relief package.
House Speaker Tina Kotek wants to delay a special session until July (at the earliest). Senate President Peter Courtney has urged a June special session date.
State and federal legislative responses also will be influenced by the outcome of economic reopening that is occurring nationwide and the possibility of new spikes in the coronavirus outbreak. The current rolling three-day average COVID-19 death rate in the United States is 1,307, as total morbidity exceeded 100,000 last week.
In the absence of substantial additional federal emergency aid or a speedier economic recovery than anticipated, Oregon state budgets face a sharp scalpel. Brown requested state agency heads to propose how to trim 17 percent from their respective budgets. Because a number of the cuts are politically unpalatable, Brown has raised the prospect of a tax increase. She earlier denied a request from business leaders to delay the implementation date of the new corporate activity tax, which went into effect January 1.
State economists last week shared alternative economic and revenue scenarios to their baseline projection. Their “optimistic scenario” is based on a faster economic recovery, but still would see Oregon unemployment topping out at 18 percent instead of 23 percent. That would push personal income up 3 or 4 percent and add another $500 million in state General Fund tax revenue in both the current and subsequent biennia.
The “pessimistic scenario” centers on a double-dip recession, caused by a second severe round of the coronavirus outbreak this fall. Under this scenario, unemployment in Oregon remains above 20 percent for almost two years and personal income declines by 7 percent. Full economic recovery doesn’t occur until late 2027. State tax revenues would drop another $700 million in the current biennium and $1.4 billion more in the next biennium.
“While the baseline forecast is our outlook for the most likely path of the Oregon economy, many other scenarios are possible,” state economists said. “Given the uncertainty about the path of the virus and public health, the range of potential outcomes is larger than usual.”