SALEM—Some Oregon leaders worry that delaying the state’s April 15 income tax deadline could undercut funding for fighting the coronavirus pandemic.

The IRS has moved the federal deadline for filing tax returns and payments to July 15. Wednesday is the deadline for the Oregon Department of Revenue to announce whether it will extend the state deadline.

A full-fledged delay until July could create up to a $1.5 billion cash-flow problem for the state budget, said Rep. Paul Holvey, D-Eugene, co-chair of the Legislature’s Joint Special Committee on Coronavirus Response.

“That’s a huge cash-flow problem, which probably takes many of the items we want to help with off the table, I’m afraid,” he said during the committee meeting Tuesday.

His comments drew a strong response from Sen. Tim Knopp, R-Bend.

“Cash flow problems, really? The government just shut down about 90 percent of our businesses in the state of Oregon, who now have massive cash-flow problems. And the whole reason to delay the filing and payment is for them to be able to catch up,” Knopp said.

“So for the government to, at this point, claim poverty or to claim cash-flow problems after what they’ve done to business, quite frankly just seems incredibly hypocritical.”

Knopp said the deadline should be delayed so businesses could recover and have sufficient cash-flow to pay their taxes. Rep. Greg Barreto, R-Cove, agreed and added, “I can tell you right now businesses across the state are laying off.”

The committee also discussed whether to delay implementation of the new corporate activity tax as part of  proposals to help businesses and individuals.

Rep. Janelle Bynum, D-Happy Valley, urged the state government to stay disciplined: “That means we find out who’s in trouble and who’s not. I don’t want people who are doing just fine to hide behind those of us who really are struggling.”

Bynum, who co-owns several fast food restaurants in the Portland area, added that she probably wouldn’t have the cash to pay all her taxes.

“I’m one of those businesses that looks like it has a lot of money,” she said, “but it goes out faster than I can keep it. But I’d rather be upfront about what is happening in my business, so that whatever help I need, I know what to ask for.”

She suggested that the Department of Revenue offer payment plans and, if necessary, partial forgiveness instead of delaying the filing and payment deadlines.

State economists are scheduled to deliver their next economic and revenue forecasts on May 20. The projections for state tax and lottery revenues are expected to fall sharply due to coronavirus-related layoffs, reduced business operations and shutdown of video poker machines.

During a telephone press conference with reporters on Tuesday, Gov. Kate Brown said already worried that the state faces a huge shortfall, noting that “the economy is tumbling down.”

“I am gravely concerned about our ability to deliver basic services over the next six months to a year given the drop in revenues, and that’s why I am encouraging the Legislature to be extremely fiscally prudent,” she said.

The Legislature likely will hold a special session next week to provide funding and make temporary changes in state law to deal with the pandemic.

Brown said she is seeking $250 million to respond to COVID-19 along with policy changes to aid response. She also is asking that more money be put in reserve in case of a bad wildfire season.

The governor said she received information Monday about whether to change the state tax deadline, was having more conversations Tuesday and would announce a decision within the next 36-48 hours.

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