by James DeChene
This week saw the confirmation of former DEDO director Cerron Cade to fill the vacant Secretary of Labor position. The Chamber looks forward to working with Secretary Cade in this new position on issues important to the business community.
Also this week, HB106 was released from committee, which would add two additional personal income tax brackets at $125,000, with a rate of 7.10%, and an additional bracket of $250,000, with a rate of 7.85%. The State Chamber spoke against the bill, noting that it would add volatility to Delaware’s revenue collection at a time when efforts are being made to make Delaware less reliant on volatile sources of revenue. This reliance has an increasing deleterious impact on the State’s long-term sustainability.
Governor Carney released his recommended budget, an increase of 3.49% over last year, which calls for increased spending on education, public safety and making investments in economic development and workforce development. It also includes an increase in the bond bill, along with $100 million in cash as one-time money for projects. Door openers, including class room growth, employee pensions, child care and transportation, were about $60 million in increases.
It also includes:
$12.5 MM — strategic fund
$2 MM — Prosperity Partnership
$9.6 MM — research collaboration
$19.5 MM — high education capital construction
$391.1 MM -- DELDOT road systems
$6 MM — clean water/drinking water
The Chamber will be monitoring ongoing budget discussions and will update you with pertinent info.
The General Assembly returns next Tuesday with a full plate. Work will commence stemming from taskforces that met over the summer and fall, which include school district redistricting and changes in funding models, and the legalization of recreational marijuana. Thrown into the mix will be legislation to raise money to invest in clean water infrastructure, incentivize angel investors to provide capital to small startups in Delaware, and the fight on minimum wage legislation will no doubt continue. These bills, and ones to come, will be the focus of the Chamber this legislative session, along with continuing to implement legislation passed last year—namely the Delaware Prosperity Partnership and the regulations surrounding modernizing the Coastal Zone Act.
In addition, the Chamber will be involved in ongoing budget discussions as the Administration and General Assembly continue to search for ways to address Delaware’s long term economic growth and sustainability. What will be interesting to see this year, is how the Federal tax plan will impact Delaware. Much of what was contained at the Federal level was proposed at the end of last year’s session to help fill a $350 million budget gap, including increasing the standard deduction, reducing itemized deductions, and modifying personal income tax bracket levels. If the projections the state Department of Finance provided last year hold true, that could mean big money for Delaware coffers, and reduce the chances for last minute budget battles this year.
All this, and more, to come. Stay tuned.
Maybe it’s a continuation of my turkey coma, but I saw a lot of positive things happening this week in and around Delaware you may have missed. Chamber member, and Taste of Delaware participant, Waggies by Maggie & Friends, a Wilmington nonprofit dog treat company that employs people with intellectual disabilities, has won the $10,000 grand prize in M&T Bank’s first Understanding What’s Important Business Challenge. Maggie’s has been a great friend of the Chamber, and everyone here is so pleased at their award. Congrats!
The announcement of a sports arena to be built by the Riverfront, with a connecting bridge to area attractions like Iron Hill and Frawley Stadium, is huge for Wilmington. Above and beyond what it can bring for economic development, it’s a major quality of life project for an area of the City that desperately needs one. Kudos to Governor Carney, Mayor Purzycki, and BPG for working together to bring this project to Delaware.
Speaking of Governor Carney, you may have read about the release, a bit early, of his Wilmington schools plan. While the plan will undergo a number of changes, what struck me was the Governor taking the time to visit residents of Wilmington in person, urging them to participate in the process and to educate them about what his plan will mean for Wilmington kids and families. Door knocking can be hard, and at times even unpleasant, but it’s also one of the best ways to sell your message. Color me impressed.
Lest you think I’ve lost my Grinch-esque ways, let me end by saying we’re following chatter that there’s an effort afoot to build support in order to increase Delaware’s Renewable Portfolio Standard to 50%, with an 8% carve out for solar generation. Currently, Delaware’s Renewable Portfolio Standards (RPS) are established by the Renewable Energy Portfolio Standards Act (REPSA), which provides that utilities procure an increasing percentage of their electricity from renewable resources, leading up to 25% of energy derived from renewable sources by 2025. Obviously we’ll be watching this closely.
by James DeChene
June 7th was the Chamber’s End of Session Legislative Brunch held at Dover Downs. Over 200 attendees heard from Ed Ratledge, Director of the Center for Applied Demography and Survey Research at University of Delaware, and Bob Perkins, Executive Director of the Delaware Business Roundtable, on issues impacting Delaware, the state budget going forward, and how best to foster economic development growth. Among the highlights were items previously mentioned in this space:
Attendees also heard from Senate President Pro Tempore David McBride and Speaker of the House Pete Schwartzkopf, who highlighted the state’s budget issues, their respective positions on economic development legislation, including modernizing the Coastal Zone Act, and the reorganization of the Delaware Economic Development Office. They also stressed the need for increased revenues to fund health care and education, the state’s two fastest growing expenses, which together account for over half of the budget. Their remarks adumbrated the potential for further revenue increases beyond the Governor’s proposed 50-50 split of new revenue and expense reductions.
The House Natural Resources Committee voted 9-1 to release HB 190, a bill to modernize the Coastal Zone Act. It will face a floor vote next week. The hearing featured passionate testimony from both supporters and opponents, with supporters focusing on the need for the redevelopment of industrial sites currently a blight on Delaware’s landscape. Chamber President Rich Heffron suited up (literally and figuratively) to deliver the Chamber’s position of support. More updates to come next week as the bill continues to see action.
By James DeChene
This week JFC met and voted to cut about $33 million from state spending, including eliminating the State Board of Education. Future meetings, and the process, have been put on hold until legislators pass a series of revenue packages equal to approximately $190 million. To date, the House has passed a measure to raise the Corporate Franchise Tax by $115 million, where it now faces action in the Senate. As has been discussed a, 50-50 split between new revenues and spending cuts concatenate to form the mechanism to balance the budget.
Next week the General Assembly returns for June, with 13 legislative days left until the end of session on June 30. There are a number of hearings next week important to the business community, including HB190, which would update the Coastal Zone Act, a State Chamber of Commerce legislative priority. Also in committee will be a bill related to escheat that provides a number of technical corrections to SB13, an escheat bill passed earlier in the year.
by James DeChene
Delaware Economic and Financial Advisory Council (DEFAC) met on April 19, and the news stemming from their latest forecast continues to be cause for concern. DEFAC anticipates the state will bring in about $4.8 million less this year and $11 million less in 2018. Between expenditure savings made by the state, an additional $9.1 million has been added to the budget gap, meaning the state is now facing a $395 million budget hole. What this means for the Governor’s recommended budget is unclear, as it was crafted to deal with a $386 million shortfall. Most of the decline came from the Corporate Income Tax, which dropped by an additional $14 million in 2017, and $15.8 million in 2018. Those projected losses more than offset $14 million in projected gains in personal income tax revenue this year and next. The next meeting is on May 15.
The General Assembly is back in session next week, and will take up a number of bills relative to the business community, including the Homeless Bill of Rights, the legalization of marijuana, wage history reporting, the lodging tax, along with the continued conversations surrounding an increase in Personal Income Tax rates and increases to Corporate Franchise Taxes. More to come.
James DeChene is the Chamber's Senior Vice President of Government Affairs.