by Mark DiMaio
In 2000, Delaware had a 65+ population of 103,000 and by 2015, the 65+ population had grown by 56,000 to 159,000 people. During the same time period, the state’s health care employment had grown from the third largest employment sector (40,000) to the largest sector with 70,000 jobs. The growth of health care employment is keeping pace with not only our 65+ population growth, but with the state’s overall population growth. Delaware’s growing aging population is likely to spur continued growth in the health care job sector. Over the past 15 years, Delaware's finance job sector has hovered around 48,000 jobs, but our manufacturing sector has decreased by 12,000 to 28,000 jobs. Delaware’s manufacturing job sector decline mirrors much of what has taken place nationally. But over the past six years, Delaware’s manufacturing sector decline has slightly outpaced the national trend. It’s wonderful that our health care job sector continues to grow, but Delaware needs to keep a diverse employment environment, and manufacturing jobs need to play a key role.
A study by Ed Ratledge, Director of the Center for Applied Demography & Survey Research at the University of Delaware, points out that Delaware’s General fund expenditures will outpace the state’s revenue collection, and forecasts a gap to continue beyond 2020. While Delaware’s employment picture has greatly improved since 2008, manufacturing jobs have been slow to return. Growth in the manufacturing sector is critical to a prosperous Delaware. Manufacturing employment can create not only well-paying jobs, but drive employment in the job sectors that service those businesses. The Delaware State Chamber of Commerce is committed to working with stakeholders to revitalize Delaware’s manufacturing sector and drive economic growth. Diversified economic growth is essential to building a thriving Delaware economy.
by Mark DiMaio
Only one age demographic of Delawareans is expected to grow significantly over the next 33 years and that’s our 65+ population. According to Ed Ratledge, Director of the Center for Applied Demography & Survey Research at the University of Delaware, research shows that Delaware’s 65+ population will increase by roughly 60% from 159,000 in 2015 to an estimated 263,532 by 2050. National surveys show that the average US wage earner’s income peaks around age 55 and decreases considerably as the earners approach age 65. Delaware relies heavily on personal income taxes (PIT) to fund state government and the state’s two largest population groups, 20-44 and 45-64 (2015), provide a high percentage of the state’s PIT collections. Those two age groups are only projected to increase by 20,000 over the next 30 years while the 65+ population will increase by over 100,000. How will an additional 100,000 seniors affect the state and its future budgets?
A storm is coming. Our increasing 65+ population, that historical provides less PIT and coupled with an increased need for services will put a strain on Delaware’s future budgets. How is Delaware preparing for this drastic population change? What can Delaware do proactively to lessen the impact of the demographic shift? Many tough decisions lay ahead for present and future elected officials. Delaware already faces a structural budget situation where state expenditures out pace revenues for the foreseeable future.
Ed's slides regarding this can be found below. Click on an image to view larger.
by James DeChene
As part of the State Chamber's Strategic Plan, created by staff and the Board of Directors last year, one of the initiatives included greater emphasis on engaging our members across the state. We questioned how we could be targeted in our outreach, and our plan included engaging members in each of the counties to help us inform our members on not only what the State Chamber is up to, but also to hear from our members on what issues are important to them.
Last week, staff met with the newly created Advisory Committees in both Sussex and Kent counties. The meetings highlighted that while many of the issues our members face are universal (the looming budget deficit or the impact of a minimum wage increase), each county zeroed in on issues specific to their geography.
In Sussex, tourism was the main focus of the discussion, but included issues such as infrastructure (the need for better east/west transit and public transportation) since much of the tourism and retail workforce lives in the western part of the county since it's cheaper to live there than at the beach. Items also included the potential of DEDO becoming a public private partnership and the impact felt by tourism.
In Kent, the focus was on workforce development, specifically in the manufacturing community. Multiple attendees related how difficult it has been to recruit employees in technical fields and the hurdles they face to expand as a result. Members heard about workforce training programs available at DelTech, and with those discussion will come a plan on how to get skilled workers where they are needed.
The goal is to have quarterly meetings with our Advisory Committees to continue the conversation on areas where businesses are seeing success, and where new issues are cropping up. We look forward to reporting back and we would like to thank our Advisory Committee members for taking the time to meet with us and share their ideas and concerns.
Kent County Advisory Committee:
Chris Baker, George & Lynch
Rob Book, Delaware Electric Cooperative
Buff Bruno, Edgewell Personal Care
Justin Cressler, KraftHeinz
Judy Diogo, Central Delaware Chamber of Commerce
Jerry Esposito, Tidewater Utilities - Chair
Sue Garson, WSFS Bank
Michael Gast, M&T Bank
Ron Gomes, Painted Stave
Ken Hoffmann, PSCI
Bob Keck, Calpine (Garrison Energy Center)
Neal Nicastro, PPG
Larry Rohlfing, Fulton Bank
Justina Sapna, Delaware Technical Community College
John Van Gorp, Bayhealth Hospital
Stu Widom, Calpine
Harry Williams, Delaware State University
Lincoln Willis, The Willis Group LLC
Sussex County Advisory Committee:
Bill Allan, Delaware Community Foundation
Rob Book, Delaware Electric Cooperative
Barbara Brewer, Atlantic Sands Hotel
Kevin Broadhurst, Comcast
Lynn Brocato, Greater Seaford Chamber of Commerce
Tommy Cooper, Cooper Realty
Michael Elehwany, Miller Metal
Carol Everhart, Rehoboth Beach – Dewey Chamber of Commerce
Juan Flores, Invista
Judy Johnson, Fulton Bank
Richard Kenny, ShopRites of Delaware
Alan Levin, SoDel Concepts
Kristie Maravali, Bethany-Fenwick Chamber of Commerce
Sean McKeon, Mountaire Farms
Chris Moody, Delaware Technical Community College
Chad Moore, The Bellmoor Inn & Spa - Chair
Chris Perdue, Perdue Farms
Betsy Reamer, Lewes Chamber of Commerce
Rob Rider, O.A. Newton
Rhett Ruggerio, Ruggerio Willson Associates
Jo Schmieser, Chamber of Commerce of Milford
Mark Stellini, Assurance Media
Scott Swingle, WSFS Bank
Alex Sydnor, Beebe Hospital
Scott Thomas, Southern Delaware Tourism
Chris Willett, M&T Bank
by Mark DiMaio
On Wednesday, March 8, the State Chamber’s Board of Governors was honored to have Mr. Ed Ratledge, Director of the Center for Applied Demography & Survey Research at the University of Delaware, as their guest speaker. Mr. Ratledge has more than thirty years of experience and expertise providing policy and survey research for federal, state and local government agencies and non-profit organizations. His presentation focused on Delaware’s economic and demographic trends projected for the next thirty years. Mr. Ratledge’s research shows that number of Delaware households will increase to over 400,000 by 2030, but will level off until 2050. Additionally, the research shows that by 2050 the state’s 65+ population will increase from 158,999 (2015) to an estimated 263,532. However, Delaware’s 0-19 population will remain relatively stagnant over the next 35 years, averaging 232,900 per year until 2050.
Mr. Ratledge’s research also showed that Delaware’s general fund expenditures will grow faster than projected revenues at present, and continue to do so beyond 2020. While the state’s pension and debt service expenditures have gradually increased from FY12 to FY17, active and retired employee healthcare expenditures have accelerated significantly from FY15 to FY17. Chamber President Rich Heffron believes Mr. Ratledge’s analysis of our aging population and expenditures should give everyone pause.
“Ed Ratledge’s research is very sobering and reinforces Governor Markell’s 2016 State Financial Overview (presented on 1/28/2016, slide 16) that forecasts a $484 million dollar deficit in the state’s group health insurance plan for employees and retirees by 2022, if employee contributions remain the same. Ed does a great job of laying out the facts and we look forward to working with stakeholders to find sound solutions to the state’s budget issues,” said Rich Heffron.
Mr. Ratledge's research will kick off a 3-week series in the Chamber’s Weekly Report email that will further explore some of his data.
The University of Delaware’s STAR Campus hosted the Chamber’s Economic Development Committee (EDC) on Wednesday, March 1st. Dr. Kathy Matt, Dean of the UD’s College of Health Sciences, was the keynote speaker. Dean Matt highlighted the STAR Campus’ role as a center of innovation that combines cutting-edge research, world-class academics and flourishing businesses.
The STAR Campus began in 2009, redeveloping the former Chrysler automobile assembly plant. The site has completed Phase 1 and 2 development, housing the University’s College of Health Sciences, Bloom Energy and SevOne. Upcoming Phase 3 development includes a 10-story office tower that will house state-of-the-art classrooms and research facilities for the university. The $40 million structure will also offer three floors of office space for high-tech commercial tenants. The project is slated for completion by mid-2018. A proposed Amtrak station to be built along the tracks immediately north of the STAR Campus could provide an additional catalyst for business expansion.
EDC Chair Michael Vanderslice of Environmental Alliance said of the project, “The Phase 3 expansion provides a great opportunity for the STAR Campus to create more collision space between businesses and the University. The EDC looks forward to working with the STAR Campus as a key player in Delaware’s economic growth.”
The EDC also thanks Michael Smith, the College of Health Sciences’ Director of Initiatives/Partnerships for hosting the meeting.
by Chip Rossi
DSCC Chairman of the Board
The Delaware State Chamber of Commerce Board of Governors met with the candidates for the special election in Senate District 10. Both candidates shared their thoughts on how to turn Delaware’s economy around and improve education. Each acknowledged that Delaware’s economy and budget should be the primary focus of the Delaware General Assembly and the Governor – and need to be addressed.
After the presentations, the Chamber’s Board of Directors discussed if the Chamber should endorse a candidate. Both candidates presented well and focused their remarks on many of the things the Chamber advocates for every day, including the growth of small business, infrastructure, good jobs and safe, healthy communities throughout the state of Delaware.
Our focus quickly shifted from the candidates themselves to what this election means long-term for Delaware.
The spirited discussion that followed highlighted the importance of a change election if Delaware is to improve its political and economic standing. We find ourselves, year after year, facing budget deficits that underscore a fundamentally broken system and legislative remedies that are too often short-sighted. Given the urgency of the moment, the questions raised by the Board included:
For all the reasons stated above, this district election has statewide impacts. The answers to these questions, and others, are critical if Delaware is going to succeed as a place where businesses want to relocate or expand, where families want to raise their children, and where those children don’t have to leave our state to find gainful employment.
On February 25th, the voters in the 10th Senate District have an opportunity to consider these questions and determine the path forward.
Read coverage of this piece in The News Journal here.
by James DeChene
A reminder for residents of the 10th Senate District, as if you needed one with all the mailers, ads, door knockers and other campaign activities blanketing the area, that the special election is Saturday, February 25th.
The Chamber’s Board of Directors message on what we feel voters should focus on can be best summed up as:
It's common knowledge that Delaware likes it's food - one of the reasons we love our Taste of Delaware event at the Capitol each year. It's also why culinary arts programs are popular tracks for students to follow, and why you can bet these students are serving up delicious meals.
When you are deciding where to go for lunch, or who to cater your board meeting, Wilmington certainly offers a wide variety of options. We highly recommend adding Delcastle Technical High School to that list.
Delcastle Technical High School has been a Taste of Delaware participant for several years now. Taste of Delaware caters to more than 600 attendees, featuring over 20 Delaware food and drink vendors. Sophomores and juniors in the culinary arts program, and who are part of the school's Cooks and Bakers Club, join us and Senator Coons' staff before the event begins to help set up the area and help vendors with their equipment and food. During the event, they man registration and run errands and items for our vendors in order to keep things running smoothly. We appreciate the extra hands on deck, and they get a first hand look at a culinary event of large proportion, from beginning to end.
This week, some of our staff visited the instructional staff and students of the culinary arts program at Delcastle for lunch at Binders Cafe. We were blown away!
This week's menu boasted chicken stir fry made to order, cajun shrimp over greens with a citrus vinaigrette, and perch tacos with pineapple rice. Don't forget the chicken noodle and butternut squash soups, Delcastle's own homemade potato chips, or the grab-and-go selections of pre-made wraps and sandwiches. The dessert of the day was German chocolate cake, but we were too fond of their signature chocolate chip and oatmeal raisin cookies. We were seated and served by students, who learn customer service skills as well during their studies, and were treated with fresh rolls and blueberry sweet potato bread, served with cinnamon butter.
Delcastle's culinary arts program is designed to provide students with the opportunity to reach competency in major areas of food preparation. Students are expected to work in all areas of the culinary arts field, including dining room operations, cooking, bakeshop, and pastry making. They will be expected to work individually, in groups, and in a professional kitchen brigade to experience a wide range of learning experiences in keeping with industry expectations. Those who have demonstrated a mastery of the major culinary learning targets will have the opportunity to experience extended cooperative employment in their senior year. Students are able to earn college credit through Tech Prep Agreements with area and out of state colleges. Students also have the opportunity to earn ServSafe Sanitation certification (a nationally recognized certification that lasts for five years).
The Cooks and Bakers Club is a volunteer cooking troupe that serves several purposes: to introduce children to the science of cooking (Delcastle students volunteer at places like Ronald McDonald House to teach resident children), to help prepare students for state and national cooking competitions, and to further their training through community service learning projects, like baking cookies for each Delaware police officer every year, and 'living classroom' experiences, such as the Taste of Delaware.
We thank the staff and students and Binders Cafe for hosting us!
Call the school at (302) 995-8100 to inquire about Binders Cafe catering and dining.
Delcastle Technical High School students helped vendors prep their tables and serve attendees at the 6th Annual Taste of Delaware.
Students assisted with event setup by unloading vendor equipment from the docking area.
Delcastle Technical High School students in the Capitol Building.
DSCC staff with sophomore chefs-in-training, who were able to join us for dessert this week at Binders Cafe.
by James DeChene
A recent article highlighted 2 dozen businesses leaving California in the wake of the passage of Prop 30, which amounted to a $6 billion increase in taxes in the Golden State. A recruitment drive by neighboring Arizona, which boasts lower taxes, a streamlined permitting process, and a reduction in other business regulations, has led to an influx of 50,000 people moving into Phoenix in the last year, while California has seen a net migration of 100,000 leaving the state. Other contrasts include California considering another paid holiday for state employees, while Arizona has placed a moratorium on new business regulations. While California ranks dead last by the Small Business & Entrepreneurship Council, Arizona is ranked 8th, and Delaware is 34th.
There are important takeaways applicable to Delaware from the linked-to article and study. Namely that as the General Assembly focuses its attention on expanding regulations on businesses and expanding benefits to state employees, instead of focusing on how to make Delaware more attractive for businesses not just to incorporate but to relocate here, other states are going to continue to eat our lunch.
by Mark DiMaio
Delaware’s projected state revenues have deceased by an additional $26 million over DEFAC’s September 2016 revenue forecast. DEFAC now projects that state revenues for the 2017-2018 fiscal year will be about $200 million dollars less than the current 2016-2017 fiscal year. The decreased revenue projection to $3.9 billion equals about 5% less than the $4.1 billion being spent during the State’s current fiscal year. In addition to the decrease in projected revenues, the cost of state government is projected to increase by $150 million dollars with Medicaid spending, state employee health care costs and increased school enrollment driving the escalation in state spending.
The DEFAC report points to flat revenue growth for upcoming fiscal years, which could lead to an annual cycle of seeking revenue enhancements. Even if Delaware can successfully restructure its future revenue portfolio, state spending could outpace new revenues. Delaware’s murky fiscal picture has been static for the past several years, with many elected officials focused solely on generating and increasing revenues to the state. If Delaware has finally reached a fiscal crossroads, maybe it’s time to take a serious look at state spending. The old playbook of raising corporate franchise taxes, raising gross receipts taxes and many other fees may not be sustainable. At some point, companies that incorporate here may seek out other states or nations for incorporation. The sky isn’t falling but sticking to the same formula of increasing revenues without serious consideration of reducing state spending will not be viable in the long term.
James DeChene is the Chamber's Senior Vice President of Government Affairs.