Delaware’s economic challenges stubbornly persist and the same question remains: what legislative and policy changes will be made during this coming session to address the state’s enduring fiscal challenges and encourage economic development? The Delaware State Chamber of Commerce’s 2011 legislative agenda for the 146th General Assembly addresses issues such as fiscal responsibility,education, health care, energy, infrastructure, federal legislation and economic development that will be crucial
to the state’s economic recovery.
State Fiscal Policy
From fall 2008 until fall 2009, the state’s revenue projections decreased with each Delaware Economic and Financial Advisory Council (DEFAC) meeting. There was a bit of optimism when last fiscal year, the state experienced a small increase in revenue of about $136 million, based upon the fee and tax increases of July 2009. Continuing optimism was restrained this past September when DEFAC reported revenue projections that were basically flat. Historically the early DEFAC numbers are conservative, which is
not a bad thing because they cause the administration to be cautious when constructing a budget. With the economy continuing its slow but steady growth pattern of the past year and facing the prospect that the distribution of federal stimulus funding will end, the administration and the General Assembly should continue to:
• Re-examine how state government functions.
• Take a close look at how taxpayers’ money is being spent.
• Implement restraints on state spending.
• Develop new revenue sources without additional fee and tax
increases.
This is a continuation of efforts started by the Markell administration and the General Assembly following the 2008 economic collapse. DEFAC predicts slow growth will continue throughout 2012 and 2013, and businesses and citizens will continue to deal with the financial squeeze. This causes policy makers to be wary of taking additional money out of peoples’ pockets through fee and tax increases. The bottom line is that for the economy’s
recovery to quicken, businesses and consumers must pick up the pace of investment and spending.
Call to Action: All state and local governments need to continue cutting expenses and become more efficient to balance their budgets. Tax and fee increases are not viable options while businesses are still attempting to climb out of a deep recession.
Public Education
Delaware’s public schools are improving but they still lag behind in dropout rates, test scores, and preparation for higher education and the job market. President Obama’s aggressive “Race to the Top” educational improvement plan, headed by his innovative Secretary of Education Arne Duncan, will provide an additional $120 million through a competitive grant awarded to Delaware. This grant money provides new opportunities for public school system improvement efforts. Required changes will include flexible
decision making capability for each school, measuring student achievement on an ongoing basis, the state taking responsibility for addressing failing schools and including student achievement as part of teacher accountability standards. Delaware’s businesses, while working with community, education and government leaders, must continue to develop a road map for Delaware’s public schools to achieve world-class status. To meet this goal, it is imperative that implementation of the Vision 2015 plan be
accelerated.
Call to Action: The State, education community and the citizens of Delaware must continue to implement the aggressive education reform agenda outlined in Vision 2015, which is now aligned with President Obama’s “Race to the Top” education improvement program. This cooperative agenda will provide our public school system with the ability to achieve world-class status.
Health Insurance
With the passage of the Affordable Care Act, the landscape for health care and health insurance is beginning an ambiguous transformation. The difficulty for the business community is that the implementation of changes in coverage, regulations and penalties are spread out over several years. Businesses, insurers and providers are uncertain what effect this new law will have on costs and what their obligations will be. Furthermore, there is the distinct possibility some of the expected changes will be modified
before implementation. The biggest question mark on the horizon is what happens if the courts find that the coverage mandate in the statute is unconstitutional or that the government has limited authority to enforce the mandate? Despite these questions, the state is compelled to move ahead with policies such as establishing a catastrophic health coverage pool and constructing an insurance purchasing exchange. The Delaware State Chamber of Commerce will continue to keep its members informed about progress in implementing
the federal program, and will keep a close eye on any proposed legislative changes so businesses can plan for the future.
Call to Action: Business leaders need a clear understanding of the federal law and their obligations under the new statute. We need a health care insurance system that controls costs and provides the ability for everyone to obtain coverage.
Energy
Energy independence, coupled with a stable supply and a reasonable cost structure, is critical to the continued growth of our state’s economy. Numerous manufacturers have stated publicly that high utility costs are a deterrent to expanding and building facilities in Delaware. This road block to economic expansion needs to be resolved if we are going to expand manufacturing in our state. With the combined efforts of the federal government, the State of Delaware, the University of Delaware, Delmarva Power
and NRG Energy, the effort to build a wind farm off the coast of Delaware is moving forward. This is not the only opportunity for our state. Delmarva Power, along with other energy providers, is working toward finding alternative sources of renewable energy that can not only meet Delaware’s demand, but also offer opportunities for economic development.
Call to action: It is essential that we look closely at energy costs and outline a plan that will make these costs more reasonable. Moreover, Delaware must take advantage of its unique opportunities to become a leader in providing clean, reasonably priced energy for its citizens and businesses.
Infrastructure
Successful economic development efforts can only succeed if the required transportation, water/wastewater and telecommunications infrastructure is in place. Projects that will provide Delaware with the needed infrastructure are best accomplished through public/private partnerships. To be successful, our leaders must be innovative in creating partnership opportunities. Offers to privatize infrastructure have been discussed in the past and should continue to receive serious consideration. This is especially important
now, when state finances are under pressure. The proper investment in infrastructure will foster economic growth.
Call to Action: Delaware needs to continue considering all practical public/private partnership proposals that can help to increase and enhance our state’s infrastructure at an affordable cost.
Economic Development
All of the topics discussed in the Delaware State Chamber of Commerce 2011 Legislative Agenda are essential ingredients for a strategy to foster economic development. During Governor Markell’s first two years in office, progress has been made with efforts to expand the partnership with our institutions of higher education, finding means of generating greater access to venture capital, streamlining the government permitting and regulatory process, looking for global market opportunities and aggressively
promoting what Delaware has to offer to existing and new businesses. One of the most important efforts is the development of a plan that will encourage resident manufacturers to expand and attract new manufacturing companies. This will necessitate a close scrutiny of the state’s environmental regulatory process, land use policy, education and training programs, infrastructure needs, economic development investment, energy costs and tax structure.
Call to Action: We must continue ongoing efforts to find ways to encourage Delaware businesses to expand while attracting new businesses. It is essential that the state develop a manufacturing blueprint. These efforts will create jobs and produce income for Delaware’s citizens. Economic development is the cornerstone of a healthy and vibrant state economy.
Federal Legislation
We will be keeping a close watch on the new federal health care law as well as other issues on a federal level. Although control of the House of Representatives has changed and the Senate is no longer in the firm control of one party, we need to pay close attention to legislation that addresses climate change, alters the way workers can choose to form a union, tax policy changes and most importantly, those that challenge Delaware’s position as the corporate capital of the world. The message to our congressional
delegation is that the outcome of these legislative efforts can have a profound effect on the Delaware business community. It remains important that we provide affordable health care, meet the challenges of efficient energy production and climate change, protect workers’ rights and address corporate abuse, but do so in a way that does not unfairly hurt Delaware’s business.
Call to action: Make certain that our representatives in Washington understand the consequences of federal legislation for Delaware and its business community. Since September 2008, Delawareans have contended with enormous challenges to our economic viability, fiscal stability and the capacity to meet the needs of distressed citizens.
Working together we have achieved some success with these economic hurdles. The road to recovery remains a long and difficult journey that we can successfully navigate only if we work together.
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