SALEM — Legislators meeting to plot the state’s response to the coronavirus pandemic have made one thing abundantly clear.

They are flying blind, with little knowledge of what’s ahead or how much money they have to spend to respond to the outbreak and provide a bigger safety net for Oregonians.

Economists are flummoxed, too. The situation is historically unprecedented, a sudden shutdown of entire sectors of the economy — with potentially more to come. There’s no good data available to track what’s happened in the last few weeks and, in some cases, there won’t be for months.

Regardless, experts say the state is certainly looking at a severe contraction, though the depth and length are almost wholly dependent on whether the spread of COVID-19 is quickly curtailed and economic activity can resume.

“It’s fair to say with the sudden stop, we have a severe recession, at least in the near term,” said Josh Lehner, an economist with the state Office of Economic Analysis.

It’s clear, for the short run at least, that the slowdown will impact state revenues on all fronts. Personal income taxes, which generate 86% of general fund receipts, will take a hit, along with corporate taxes. Investment and capital gains tax receipts will drop amid the carnage on Wall Street. Lottery revenues are falling off the table. And fuel taxes will take a hit as people drive less.

On Wednesday, Gov. Kate Brown said the state was in what she called a quadruple bind. Revenues are falling. Demand for safety net services is spiking, so spending will go up. The health care system is under heavy pressure, so more outlays there, too. Yet the state, unlike the federal government, cannot go into deficit spending mode. It is constitutionally required to balance its budget.

On the bright side, Oregon enters this period of economic uncertainty better prepared than in any previous recession. State leaders are sitting on up to $3 billion in Oregon’s rainy day fund, the school stability fund and in reserve balances at state agencies. Brown said Wednesday that the state was also expecting $1.2 billion in aid from the federal government.

It’s still not clear, however, that money will be adequate to backstop current budgets and make some of the emergency infusions that lawmakers are considering. State revenue models show a severe recession could trim state receipts by $5 billion over two biennia.

“We’re not set up for an extreme hit,” Lehner said. “We’re set up for an average hit.”

Lake Oswego-based economist Bill Conerly cautions that he’s no medical expert, but “if you tell me what COVID-19 is going to do, I’ll tell you what the economy is going to do.”

He thinks there are a few plausible scenarios. At the optimistic end, social distancing works, things calm down in two or three months and a treatment emerges. In that case, he said, the second quarter looks like the worst ever recorded. But the economy comes booming back in the latter half of the year as consumers who kept their jobs unleash their pent-up demand, and what turns out to be an overly generous federal stimulus fuels additional spending.

“I think we’ll get a nice pop if this is under control in two to three months,” Conerly said. “We might finally get the inflation that the fed has been trying to generate.”

At the other, darker end of the spectrum, COVID-19 becomes seasonal and persistent. After a respite in the summer, he said, the virus comes roaring back in November and the country is back in recession as winter comes. That would mean living with the disease and its consequences until a vaccination is developed or a significant portion of the population is immune, possibly for years.

“If it’s persistent or seasonal, the downturn may not last as long as the Great Depression, but it could be as deep,” Conerly said. “Twenty five percent unemployment is possible in the worst-case scenario.”

In its regular revenue forecasts, the Office of Economic Analysis has been running two generic recession models to gauge potential impacts on state revenues. In a recession similar to 1990s, when Oregon had a fairly mild downturn and quick recovery, their model shows state general fund revenues would take a 14% hit in 2020, and come in $1 billion lower for the two-year budget cycle that ends June 30, 2021.

A severe recession, similar to the 2008 financial crisis, would slash revenues this year by 22% and bring in $2.7 billion less in general fund revenues by the end of the biennium. Over a longer, two biennia period, revenues could be down $4.8 billion.

Lehner cautions that those are generic models, and it’s not yet clear what form this downturn will take because of uncertainties around ongoing infection rates and how long social distancing measures will be maintained.

Again, on the bright said, he said Oregon is not overly dependent on the sectors of the economy that have been impacted so far: consumer services, travel, leisure and hospitality.

The state does have 224,000 employees in the travel, leisure and hospitality industries, who bring home some $5.6 billion in annual wages. There are, or were, another 150,000 retail employees, including food and beverage, gasoline and grocery workers, who are paid some $5.1 billion annually.

Along with the oil and gas industry, where Oregon has little presence, that’s the heart of the economic carnage so far. And while the sudden shutdowns in those industries have been immensely difficult for those affected, Oregon still fares better relative to other states.

The bigger hit to Oregon economy and state receipts, Lehner said, would come if the pandemic shut down activity in the state’s manufacturing sector. Likewise, if people stop moving to Oregon, that would curtail one of the state’s economic drivers.

John Tapogna, president of the economic consulting firm, EcoNorthwest, said that in general, financial markets and the economy at large are taking their signals from coronavirus infection and death curves, not the federal stimulus or monetary policy interventions that drive day-to-day volatility.

“Fighting the virus is the same as our long-term economic prospects,” he said. “It will only truly find a foundation once it sees we’re clear of exponential growth.”

In the meantime, he says the most important measures lawmakers can take are ones that help businesses weather the recession and keep workers on their payrolls. That could come from the federal stimulus package in the form of low- to no-interest small business loans. Or it could be some form of tax credits or rent assistance offered by the state.

“All the businesses that are not directly hit are primarily in a solvency game, continuing their operations while demand is probably going to be disrupted,” Tapogna said. “Is there something you can do with those businesses that encourages them to hold onto staff and not put additional stress on the unemployment system.”

As lawmakers prepare for a special session as early as next week, the governor said Tuesday that she wants them to approve “roughly in the neighborhood of $250 million” to aid the state’s response to coronavirus. It’s unclear if that is the extent of the response.

The governor announced Wednesday that the state will delay the deadline for filing state income taxes until July 15, matching the new federal deadline. Taxpayers will still need to cover their liabilities, and businesses that file estimated taxes are still required to do that quarterly. The state can likely borrow short term to meet any cash flow needs the delay causes. So Lehner said the impact on the state’s spending picture won’t be too significant because the money will still come in within the biennium.

Another proposal the lawmakers are considering is to delay the state’s new business tax for education. The corporate activities tax — a 0.57% assessment on commercial activity above $1 million in the state — launched Jan. 1, and estimated payments are due in coming weeks.

The tax is expected to generate $1.6 billion in revenue in the current budget cycle, a big backstop for school spending and the budget in general. Delaying its implementation, however, is a priority for businesses dealing with the fallout of the pandemic.

“All the anticipated revenue is changing,” Rep. Duane Stark, R-Grants Pass, said at a hearing Tuesday. “When we see that, we might have a little bit of a grim outlook as to what we can do.”

— This article was originally published by The Oregonian/OregonLive, one of more than a dozen news organizations throughout the state sharing their coverage of the novel coronavirus outbreak to help inform Oregonians about this evolving heath issue.