The Oregon special legislative session teed up for this week won’t occur. No one is quite sure whether or when it might occur. Governor Brown issued a statement indicating she will delay calling a special session until there is “sufficient clarity” about the federal emergency relief measure and a better handle on state revenues in light of an economic slowdown.
The special session this week was intended to address some of the needs recommended by a joint bipartisan legislative committee to relieve pressure on individuals and businesses caused by the coronavirus outbreak. Many of the recommendations could be implemented through regulatory action with funding approved by the legislative Emergency Board.
However, the optics of the legislature not convening to vote on coronavirus relief aren’t good, especially after a disappointing legislative session earlier this year that passed only three bills before Senate and House Republicans staged a walkout to block passage of a cap-and-trade measure.
There are other factors at work, too. The Capitol is closed, so a legislative hearing on one or more relief measures would have to be live-streamed to allow testimony. There is some question whether Oregon parliamentary procedures would allow remote voting to prevent the 60 House members and 30 senators from congregating on their respective floors, which would run counter to Governor Brown’s order to limit gatherings of more than 10 people.
Perhaps an even bigger roadblock to a special session is a growing call by Oregon business groups to postpone implementation of the new corporate activity tax, which was enacted by the 2019 legislature and went into effect January 1. Business leaders say the tax, which is projected to generate $1 billion per year to bolster K-12 education funding, will worsen cashflow worries and make it harder for companies to retain employees and pay for their health Insurance while the state is in a virtual lockdown.
In an opinion piece published by The Oregonian, Sandi McDonough, president and CEO of Oregon Business & Industry (OBI), wrote, “On April 30, businesses across Oregon will be expected to send in their first quarterly payment of the state’s new corporate activity tax. For many, preparing to write that check will mean more layoffs, sooner rather than later. In the midst of this global pandemic and its economic fallout, they simply don’t have the cash to pay the tax and meet payroll.”
McDonough added, “The tax is new, and the education programs it will support are also mostly new with some still in the development stage. We are not asking for a permanent change, just a pause, to give employers some respite, let them hold onto more of the scarce cash they have and then use it to pay their workers, provide benefits and hopefully save their business and their employees’ jobs for the long term. When we are through this, we can work together to get those education programs on track.” Supporters of the Student Success Act have pushed back on postponing the new tax.
Then there is lingering distrust from the 2020 session walkout. If a special session is called, Democratic leaders may want to extend the agenda to some of the legislative matters, especially funding bills, left on the 2020 session cutting room floor when Republicans walked out. Republican leaders will want assurances Democrats won’t force a vote on cap-and-trade if they return to Salem for a special session.
Governor Brown is also part of the equation, especially since she is responsible for calling a special session. A recent report from the Institute for Disease Modeling out of Bellevue, Washington indicated there is “strong evidence that measures currently in place in Oregon are reducing transmission.” With this information, the Oregon Health Authority released a statement arguing that Brown’s executive orders requiring a statewide lockdown have paid off, but the quarantine needs to remain in place until May at the earliest. A new poll released this week shows 55 percent of Oregonians approve of Brown’s increasingly strict executive orders as opposed to 38 percent who disapprove of her actions. Democrats were the most supportive, but she also earned positive marks from 52 percent of non-affiliated voters.
Another argument for delaying or holding off a special session is to gauge the impact of the $2.2 trillion federal emergency relief package, which includes additional $600 weekly payments to unemployment insurance claimants laid off because of business closures in response to coronavirus executive orders. The federal legislation also expanded eligibility to contract workers and self-employed individuals. There already is talk in Washington, DC of another $2 trillion emergency relief bill. State budget leaders may be hesitant to allocate limited state resources for programs and services they expect the feds to cover. They may decide to wait until the upcoming May legislative days (May 20, 21, 22) and the May economic forecast to assess the need and state tax revenues. Oregon’s primary election is on May 19.
Brown’s statement said, “We want to make sure our scarce state dollars are focused on filling in gaps left by the federal stimulus package, not duplicating efforts. Once we have sufficient clarity about the federal stimulus, I will call a special session and ask lawmakers to take further action. In the meantime, my team is reviewing the policy changes recommended by the legislative committee to determine which are the most urgent and which can be accomplished through other means.”
Like many other states, new Oregon unemployment insurance claims have spiked, going from 800 on March 15 to 18,500 two days later. The state Employment Division fielded 76,500 claims last week. Some of the non-essential businesses and industries most affected by shutdown orders represent more than 10 percent of the state’s workforce. Some economists say Oregon’s unemployment rate, which stood at a record low of 3.3 percent before the virus spreads, could reach as high as 20 percent.
Layoffs are expected to lead to a flood of applications for health coverage under Medicaid, which could add further financial strain to the state budget. There already has been a noticeable spike in demand for Medicaid mental health services.
Health care professionals predict COVID-19 will leave lasting footprints on the medical profession. Health care providers may make it standard practice to wear protective head gear when tending to patients. There also could be expanded collaboration among health care organizations and more use of telehealth, including doctor-patient visits on Zoom. And, the virus may not have yet run its course, returning for a second wave in the fall or even in some mutated form next year.
Josh Lehner, an Oregon state economist, provided a highly variable economic prediction: “Overall it is plausible we experience a strong rebound in economic activity later this year. But it is also plausible we see a period of prolonged weakness if the public health crisis does not abate.”