By Anthony K. Smith
For nearly two months now, our lives have changed, dramatically. Turn the clock back to the beginning of 2020 and the economy was humming along, the stock market was seeing record highs, unemployment was historically very low, and Oregon’s state budget was in great shape.
Unfortunately, none of that is true today, but fortunately, the public health impacts in Oregon have improved, and now, a desperately needed conversation has started about economic recovery.
That road to recovery begins on every Main Street across the state. For policymakers, it must start with this simple realization: There are no wages to be earned, no paid time-off or health benefits to use, and no income taxes for the state, if Oregonians aren’t working.
The federal government has acted swiftly to provide a temporary reprieve for America’s small businesses in the form of the Paycheck Protection Program, a loan-to-grant program that has helped keep many workers on the payroll for the short-term. But these loans are limited by the availability of funds and the timeline for which funds can be used. Bills passed by Congress have helped stop the bleeding. Now, Oregon must do its part.
Last month, the Oregon Legislature’s Emergency Board met remotely and approved $32 million in funding for several coronavirus-related needs, including a $5 million appropriation to Business Oregon for small business financial assistance, to be matched by $5 million in existing funds. No doubt, this money will prove essential to those businesses that are able to access it, but lawmakers are going to have to do much more if small businesses across the state are going to see any relief.
It’s likely that the Oregon Legislature will hold a special session in the coming weeks. When they meet, lawmakers should be laser-focused on policies that will move people back to work as soon as possible. It should go without saying that means businesses need money to be able to pay employees, but occasionally, the Legislature seems to forget this fact.
In recent years, state lawmakers have seized on the political opportunity of a good economy to enact new taxes and state-mandated benefits for workers. Every one of these laws carries a very real cost for Oregon’s small businesses. That booming economy, at least for now, is gone. We all need to acknowledge this and, appropriately, push the pause button.
For example, Oregon’s new tax on gross sales, the Corporate Activities Tax, is still less than a year old. It took effect on January 1 and the first quarterly payments were due on April 30. Some businesses were able to pay on time – others had to make a terrible decision between keeping their employees on the payroll and paying a brand-new tax that is dedicated to additional spending on new public education programs. When lawmakers meet for the special session, they should retroactively delay the implementation of this new tax for at least the first two quarters of 2020.
Oregon’s restaurants were some of the first businesses to shut down – or scale back significantly to accommodate take-out or delivery only. Many of the workers in the service industry make tips, in addition to their hourly wage, which is often set at the state minimum wage. Back in 2016, Oregon passed a new minimum wage law that created three tiers based on region, with scheduled increases to occur every July 1 until 2023, when annual increases (if warranted) will be adjusted to inflation. Lawmakers should reset the next increase (and future scheduled increases) to January 1, so that employers can hire more workers with the limited cashflow they currently have available to them.
Finally, the Legislature must recognize that fewer tax dollars collected means less to spend. They must resist the temptation to tax their way out of a budget hole because every dollar siphoned away from an Oregon small business is one less dollar spent on equipment, inventory, or employee wages. They must also prioritize spending on critical existing services – not new programs, like they did on March 9 (right near the beginning of the COVID-19 crisis) when they allocated $5 million to the Department of Environmental Quality for agency rulemaking purposes to implement Gov. Kate Brown’s executive order on greenhouse gas emissions.