by James DeChene
Governor Carney has released the report from the Delaware Economic Development Working Group. This is the group that was formed to consider a public-private partnership to restructure the Delaware Economic Development Office (DEDO).
In short, the report recommends taking four key functions of DEDO out of the agency and placing responsibility for them in a new 501(c)3, which will be co-chaired by the Governor and a leading business executive.
The four functions are:
The estimated budget for the new organization would be $2.5M, consisting of $1.5M from the State and $1M from the private sector annually.
Next steps include drafting legislation for consideration in 2Q 2017, fundraising, appointing a board, hiring a CEO and developing a strategic plan. Please read the report for more details on the timing of these guidelines.
The co-chairs of this committee are Rod Ward (DPPI Board of Trustees) and Mark Brainard (DSCC Board of Governors). Also serving on this committee are Nick Lambrow and Richelle Vible of the DSCC Board of Directors, and Terry Murphy of the DSCC Board of Governors. Thanks to each of you for your time and commitment in getting this accomplished.
by James DeChene
Following a week where Governor Carney released his 'State of the State for Delaware', outlining his priorities that included Coastal Zone Act modernization, a renewed focus on economic development and growth, and continuing gains made in education policy, this week was relatively quiet by comparison.
A number of bills were either introduced or heard in committee this week that would have an impact on Delaware businesses.
HB80, a bill that would limit the number of rating factors insurance companies can use to quote auto policies was tabled in committee to allow for the Insurance Commissioner and insurance industry to work towards consensus. The Chamber is monitoring this legislation.
HB109 was released from committee, which would create two new top tax brackets at 7.1% for income greater than $125,000, and 7.8% for salaries over $250,000. Included in the legislation is a provision to eliminate itemized deductions in these brackets over the next few years. The Chamber opposes this legislation.
SB20, the second leg of a constitutional amendment to create a lockbox for Transportation Trust Fund dollars was released from committee. The Chamber supports this legislation.
HB45 with HA1, was released from committee and deals with the Attorney General’s Consumer Protection Unit’s functions. The Chamber worked with the AG’s office and bill sponsor to amend the language. The Chamber supports the measure as amended.
HB1 was introduced this week, which would ban employers from asking candidates during an interview for their salary history. Employers would still be allowed to inquire as to an applicant’s salary expectations. Roughly 50% of Chamber members asked say they do not formally ask for salary history, and the Chamber’s Employer Advocacy Committee will be reviewing the legislation at their upcoming meeting.
The General Assembly will be on Easter Break for the next two weeks, returning Tuesday April 25.
by Mark DiMaio
Delaware’s Medicaid enrollment continues to rise. Since 1999, Medicaid enrollment has grown from just under 100,000 to over 230,000. The growth has put a tremendous strain on Delaware’s budget. To combat Medicaid’s growth, it’s imperative that new jobs are created in Delaware. While some job sectors have grown, or at least stabilized, over the last 15 years, Delaware’s manufacturing sector has decreased by 12,000 jobs to 28,000. The 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. Manufacturing employment can create not only well-paying jobs, but drive employment in the job sectors that service those businesses. Taking steps, like modernizing the Coastal Zone Act (CZA) could attract new business and jobs to Delaware. The State Chamber is working with stakeholders to modernize the CZA and enhance Delaware’s manufacturing climate.
Medicaid spending isn’t the only state expenditure growing at a significant clip. In former Governor Markell’s final State of the State address, he points out that the current spending on state employee health care isn't sustainable. According to Governor Markell, Delaware’s cost estimates, with no increase in state or employee retiree contributions, would result in the state facing a deficit of $484 million by 2022. The continued growth in Medicaid spending, combined with a steep increase in employee health care costs, presents Delaware with a substantial problem. More jobs, especially manufacturing jobs, should help decrease the state’s Medicaid population. Bending the cost curve for state employee health care expenditures will require more than negotiations with service provides. Some measure of additional state employee contributions needs to be considered. An increased share of employee health care contributions is already a reality for most Delawareans.
The Delaware State Chamber of Commerce held its annual Legislative Brunch & Manufacturing Conference on Tuesday, March 21, 2017. We thank the event’s presenting sponsor, Delaware Manufacturing Extension Partnership, and host sponsor, Delaware Technical Community College. The event, held at DTCC’s Terry Campus in Dover, welcomed 250 guests and began with exhibitors and networking in the morning, followed by a manufacturing-focused panel discussion.
The manufacturing session’s panel focused on “Building the Manufacturing Pipeline” by way of Delaware’s Pathways to Prosperity program. Panelist Heath Chasanov, Superintendent of Woodbridge School District, shared the success the program has had in his district. His sentiments were supported by a Manufacturing Pathway student from Woodbridge High School, who communicated her experience in the program, obtaining various accreditations, building a strong foundation for her career, and her passion for using her manufacturing skills in the agricultural industry.
Kuehne Chemical Company Plant Manager, Alan Rogers, gave employer insight to the importance of the Pathways Program and how it’s not just the technical skills, but also the soft skills, that the students are bringing to the workplace that is impressive. Mary Ann Pacelli, Manager of Workforce Development, Manufacturing Extension Partnership, NIST offered a national perspective, sharing that while Delaware is not alone in its challenges in growing and sustaining the workforce pipeline, it certainly has a model that is effective and worthy of replication. The panel was moderated by Paul Morris, Assistant Vice President, Workforce Development at Delaware Technical Community College. A question and answer session followed with great discussion about growing the program, and encouraging diversity within enrollment.
Governor Carney gave the keynote address, during which he spoke to some areas of key concern, including the State’s budget shortfall; the effects of Delaware’s population, which is both increasing and seeing a significant rise in the retirement-age demographic; and, to further support the morning’s panel, the need for skilled workers in a growing manufacturing industry. The Governor touted Delaware’s size as its greatest asset in overcoming the trials ahead, namely in being able to work together, be it across party lines to push business-friendly legislation, or across the street to partner with a nearby organization, school or business.
Also announced at the event was the Frank Masley Memorial Scholarship Program, to support students pursuing careers in engineering, manufacturing, and entrepreneurship. The scholarship honors the late Frank Masley of Masley Enterprises, and his perseverance, commitment to excellence, and many achievements. Donations to the endowment fund can be made by check made payable to the DTCC Educational Foundation (‘Frank Masley Memorial Scholarship’ in the memo line), P.O. Box 897, Dover, DE 19903; or online at www.dtcc.edu/makeagift (‘Frank Masley Memorial Scholarship’ in Special Donor Instructions box).
The Chamber would like to thank the following organizations for their support: Presenting Sponsor DEMEP; Gold Sponsors Bank of America and Delmarva Power; Silver Sponsors Agilent Technologies, Chemours, Delaware Economic Development Office (DEDO), and Kuehne Company; Bronze Sponsors Advanced Power Products & Solutions, Inc., Associates International, AstraZeneca, Delaware City Refining Company, Delaware Electric Coop, Dow, Edgewell Personal Care, Item Mid-Atlantic, LegalShield, Mountaire, NIIMBLE, PPG, and W. L. Gore; and Media Sponsor Delaware Business Times.
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.
James DeChene is the Chamber's Senior Vice President of Government Affairs.