by James DeChene
This year’s “Rich States, Poor States” was released this week, and Delaware checks in at 28th for economic performance, and 36th for economic outlook. Performance is calculated by considering state GDP, non-ag employment numbers and domestic migration. No surprise that we come in high (19th) in migration as we are a retirement destination state due to low property taxes and great beaches. For economic outlook, there are 15 areas considered, some in which we score well—no sales tax, low property tax; and some not so well—marginal tax rates on both individual and corporate payers, and average workers compensation costs. These numbers are right around where we were last year: 37th in 2017 and 44th in 2016, but 27th in 2014. In the broader picture, an interesting take away was how net migration will impact congressional seats in the 2020 census. According to Election Data Services, the following states are poised to gain seats: · Texas will gain three, from 36 to 39; · Florida will gain two, from 27 to 29; · Arizona will gain one, from nine to 10; · Colorado will gain one, from seven to eight; · Montana will gain one, from at-large to two; · North Carolina will gain one, from 13 to 14; and · Oregon will gain one, from five to six. These states are poised to lose seats: · New York will lose two, from 27 to 25; · Alabama will lose one, from seven to six; · California will lose one or remain even, from 53 to 52 or no change; · Michigan will lose one, from 14 to 13; · Minnesota will lose one or remain even, from eight to seven or no change; · Ohio will lose one, from 16 to 15; · Pennsylvania will lose one, from 18 to 17; · Rhode Island will lose one, from two to one; and · West Virginia will lose one, from three to two. The “Rich States, Poor States” report lays out these numbers as well, and ties in states' overall tax policy approaches to help explain the migration. If the trend continues, high tax states will continue to lose congressional seats. It will be interesting to see how that changes the makeup on Congress, and their approach to tax policy.
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by James DeChene
Before we get to what happened in Dover this week, a reminder that our networking event at the Delaware National Guard Joint Force Headquarters is a week away. This is your chance to:
And now onto Dover. This week the JFC continued to hold meetings hearing budget requests from state agencies. I attended the Departments of Insurance, Labor, and Natural Resources and Environmental Control (DNREC) hearings, and each secretary gave a good overview of what their offices are doing and plans for next year. A few items of note included the work the State Chamber, and others like ABC, DCA, Labor and legislators, have done to address issues related to the Workplace Fraud Act and how work is performed on construction sites. That work continues, and I’m thankful that we’re reaching consensus on some big issues that will have a positive impact on the industry and its workers. Of note from DNREC, Secretary Garvin made the announcement of a website launch in the coming month that will track permit applications made to the department. As you know, the State Chamber has been working with agencies like DELDOT and DNREC on streamlining their permitting processes to help development projects become 'shovel ready' faster. This tracking mechanism, apparently similar to what DELDOT has created, will show not only delays, or speed, from the DNREC side but also track if applications are missing data, causing a slowdown from the business side. More to come once the website goes live. Hope to see you next week at the Guard event. by James DeChene
This week kicked off the first round of Joint Finance Committee Hearings. Meeting throughout February, JFC members will hear from each state government agency on what their budget needs are for the next year and what and how the programs they provide are faring. Of note this year is the Governor’s Recommended Budget setting aside 2% of revenues to be used in times of economic downturn. That roughly $90 million is added to $45 million that was set aside last year. This means there is a $135 million pot of money that will be carried forward into next year’s budget, given legislators follow the budget plan. The problem will be if legislators choose to ignore the Governor and invest that money in long-term programs requiring ongoing revenues to sustain them. The State Chamber has been bullish on supporting efforts of budget stabilization and remains committed to that effort. Also of note this week was a CNBC article on jobs at risk of automation. According to the article, automation will impact 25% of the US working population and many of the jobs that are either entry level, or slightly above, including cashiers, customer service representatives, and even commercial truck drivers. You can read Mike's President's Message for more on that and a link to the article. What this means functionally for policy makers is that focusing on legislative items like raising the minimum wage or creating other barriers to employment will only serve to hasten the demise of these jobs. Kiosks and other self-service centers will be adopted more quickly, leaving behind a displaced workforce lacking the training or skills necessary to move on to their next jobs. Instead, focus should be on providing skills training to targeted industries, so instead of being a cashier, a person can be a technician working to maintain and repair the kiosk. by James DeChene
This week’s focus in Dover was on two bills directed toward the 500 federal workers living in Delaware currently furloughed. The first bill, which passed both the House and Senate, allows these workers to petition the court to halt eviction and/or loss of insurance policies or automobiles due to non-payment for the duration of the federal shutdown and for a duration of 120 days after. It would also limit the amount loan holders could charge during this time period, capped at 6%, no matter the original loan terms. The second bill, which passed the House, but failed in the Senate, would provide furloughed workers the opportunity to apply for state backed, low interest loans. Also this week the Governor announced his recommended budget. Of note to Chamber members was the outlining of how a newly created infrastructure fund ($10 million dollars) would be managed, allocating $15 million to colleges and universities toward economic development initiatives; adding $7 million additional funding in the Bond bill to UD, DSU and DelTech, allocated for deferred maintenance; and setting aside $12.5 million to Delaware’s Strategic Fund. The General Assembly will be in recess throughout February as the Joint Finance Committee will meet to hold budget markup sessions. They will return March 5. by James DeChene
The bills that passed this week in Dover included an Equal Rights Amendment to Delaware’s constitution. The first leg of the amendment passed last year, in the 149th General Assembly, and the language contained in the amendment bars discrimination on the basis of sex. The House passed a measure allowing alcohol sales at the new 76’ers stadium, and the Senate passed a mini-bond bill providing more funds for capital improvements across the state. Each bill crosses the chamber to be heard next week. Also of note this week was Governor Carney’s State of the State address. The speech is used to review policies and initiatives this administration has put in place, and also serves as a blueprint for what will be this session’s priorities. The overview included a review of Chamber supported and implemented measures like the investment at the Port of Wilmington, passing the Angel Investor tax credit, the creation of the Delaware Prosperity Partnership, modernizing the Coastal Zone Act, and establishing Opportunity Zones all across the state to bring new jobs in places like Seaford, Newark, Dover, Milford and Claymont. New priorities outlined by Governor Carney included continuing to invest in broadband in Kent and Sussex counties, creating a new Transportation Infrastructure Investment fund to bolster economic development projects, and investing $60 million in education targeted a low income and English Language Learners and ensuring that all 3rd graders are proficient in reading at grade level. More to come as Governor Carney will release his recommended budget next week. by James DeChene
This week was the opening of the 150th General Assembly. Members new and returning were sworn in on Tuesday, and in the Senate committee assignments were officially released. Items of note included a bill heard in the House Economic Development committee that would allow the new stadium being built in Wilmington permission to sell alcohol. The bill was released from committee where it awaits a full House vote. The House passed HB1, the Equal Rights Amendment. The bill is the second leg of a constitutional amendment that now heads to the Senate to be heard in Senate Executive Committee next week. Also announced this week, with absolute positive reception, was the Senate Pro Tempore David McBride saying the Senate had seen their last sunrise on July 1. Historically the House and Senate work through the night on July 30 and into the wee hours of July 1 (last year the session ended at 8:30 AM). Under the new rules if the Senate has not completed all its work, it will recess at 1 AM and will reconvene at 4 PM later that day on July 1. Lather, rinse, repeat until all work is completed. A very welcome change by the staff, lobbyists and general public forced to make a bleary eyed treks home in prior years. Next week the Governor gives his State of the State address on Thursday. I also want to share the US Chamber of Commerce State of American Business address from their president Tom Donohue, highlighting how businesses are faring, and what priorities the organization is focusing on. The speech is worth a listen: https://www.uschamber.com/ by James DeChene
Next Tuesday, the day after the State Chamber’s Annual Dinner (see you there), the 150th General Assembly will gavel into session, with roughly 20% new members between the House and Senate. Other changes include a new Senate Secretary (best of luck, Joy), some new staff faces, new seating charts, and new committee assignments and offices for members. Some things, though, remain the same, including the “Delaware Blue” paint scheme that the lobby core will be staring at for the next six months. For some members, Tuesday will represent the first time they will vote “Yes” or “No,” and if history holds, they will do so a few hundred times over the next two years. The variety of items facing their votes will be numerous, and based on the pre-filed legislation so far, we know of a few specifics. Two new top tax brackets for high earners, an Equal Rights Amendment that when passed will become a Delaware constitutional amendment, and changing the polling hours for school board elections. Another stack of pre-filed bills will be released today, and certainly more will come as session continues. Items to watch include legislation to legalize recreational marijuana, more changes to Delaware’s minimum wage, proposed changes to Delaware’s LLC regulations, predictive scheduling, and a host of unknown, but important, issues that will face the business community. As legislation is introduced that impacts your business we and your elected officials need to hear from you. Share with us how new proposed legislation will impact your employees or force other changes to your business; or how it could change your plans for investment, expansion, or your ability to stay in business. These stories are critical to be heard, and we will have measures in place to make it as easy as possible for you to comment without taking time away from focusing on your operations. Your voice matters and the State Chamber works to make it heard. by James DeChene
The Delaware Economic and Financial Advisory Council (DEFAC) issued its December forecast on Wednesday afternoon. The December forecast is what Governor Carney will use when finalizing his recommended budget, to be released on January 4th. For the first time, his budget will utilize portions of the budget smoothing process, a legislative proposal that failed last year, but was issued in part via Executive Order. The order places a limit on spending growth and sets aside a portion of the surplus into a Budget Reserve Account. DEFAC reported spendable cash (98% of projected revenues) is up from the last forecast issued in September by $66.6 million. It also projects an increase of revenue of 1.7% for FY19 and 2.1% in FY20. It’s worth noting that the FY18 revenue growth rate was 9.5%. While there shouldn’t be a big budget showdown next year, there also won’t be a big windfall to be had under these predictions. One remaining unknown cost driver will be depend on how a court case is decided regarding how Delaware funds its schools, and how much more will need to be appropriated. More to come on that. The Delaware Department of Labor released a statement with details about the minimum wage increase: Minimum wage will be increasing for most individuals in Delaware twice in 2019. On January 1, it will be $8.75 and then on October 1, it will be $9.25. But, for the first time in Delaware history, we will now have a multi-tiered minimum wage. The General Assembly adopted a "Youth Rate" and a "Training Rate" that is $8.25. The youth rate applies to workers ages 14 through 17. The training rate applies to adult workers during their first ninety days on a new job. These new categories are $.50 less than the regular minimum wage rate. Effectively, that means workers under 18 and new employees with less than 90 days on the job won't see an increase on January 1st. Their first increase ($8.75) will come when they become eligible for the regular rate or on October 1, 2019, with the next general increase, whichever comes first. The labor law poster sets out all the rates. It is required to be displayed in all workplaces in a place accessible to employees and where they regularly pass. The poster is available on the Department of Labor’s website and can be downloaded in English here and Spanish here. Press Release from the Department of Labor Minimum wage will be increasing for most individuals in Delaware twice in 2019. On January 1, it will be $8.75 and then on October 1, it will be $9.25.
But, for the first time in Delaware history, we will now have a multi-tiered minimum wage. The General Assembly adopted a "Youth Rate" and a "Training Rate" that is $8.25. The youth rate applies to workers ages 14 through 17. The training rate applies to adult workers during their first ninety days on a new job. These new categories are $.50 less than the regular minimum wage rate. Effectively, that means workers under 18 and new employees with less than 90 days on the job won't see an increase on January 1st. Their first increase ($8.75) will come when they become eligible for the regular rate or on October 1, 2019, with the next general increase, whichever comes first. The labor law poster sets out all the rates. It is required to be displayed in all workplaces in a place accessible to employees and where they regularly pass. The poster is available on the Department of Labor’s website and can be downloaded in English here and Spanish here. The Delaware Department of Labor connects people to jobs, resources, monetary benefits, workplace protections and labor market information to promote financial independence, workplace justice and a strong economy. Any issues regarding wages should be directed to the Delaware Department of Labor Division of Industrial Affairs. Contact: Jennifer Zeberkiewicz Jennifer.zeberkiewicz@state.de.us 302-761-8002 by James DeChene
In advance of the January 1, 2019 enactment date, the Delaware Department of Labor has released the notice sheet employers will be responsible for providing to new and current employees. Employers can provide either a digital or hard copy of the sheet, which can be found at the Delaware DOL website, with a link on the left side -- https://dol.delaware.gov/ In addition, for employers with 50 or more employees, note you will be required to provide interactive training for all employees within 12 months of the enactment date, and within 12 months for all new employees. That training is required to be repeated every two years. Those who are in supervisory positions will need additional supervisor-specific training as well. Topics for non-supervisor employees must include the following:
For supervisors the additional training must include:
Note that if employer-provided training to employees or supervisors prior to January 1, 2019, satisfies the requirements listed above, no additional training is required until January 1, 2020. Please be aware that questions may arise on what constitutes an “interactive” training and how to satisfy the training topics. The State Chamber’s Employer Advocacy and Education Committee is taking a look at how employers can be compliant, and will continue to provide updates as we get them. |
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