Earlier this fall, the Delaware State Chamber of Commerce membership participated in a survey on their view of Delaware’s economy, key issues, and polices impacting business growth. The survey results will play a key role in the Chamber’s 2018 issue and advocacy strategy, including a continued focus on creating a successful environment for small businesses. We are listening to you as we build our advocacy agenda for 2018, which will include your top policy priorities:
As we build on the successes of 2017, your continued engagement is vital to advancing a prosperous business climate and attracting new enterprises to the state.
A special thank you to members who took the survey.
Please take a few minutes to review the survey results by clicking here.
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.
The Delaware Prosperity Partnership (DPP) held its first board meeting on October 20, 2017, at the new CSC® global headquarters in Wilmington. A 501c3 partnership created by legislation and signed into law by Governor Carney this past summer, the DPP combines the resources of the private sector and government to further economic growth in The First State. The board is co-chaired by Governor Carney and Rod Ward, CEO of CSC. John Riley was elected by the board as Interim CEO of the DPP, and a temporary office has been set up at One Commerce Center in Wilmington. John will focus on launching the initiative and recruiting a permanent CEO through a national search process. As the state’s primary resource for recruiting new business to Delaware, John will also work with the Delaware Office of Small Business, Development and Tourism under Cerron Cade’s direction to ensure a smooth transition of current projects and new opportunities.
As plans were being made to launch the DPP, the Amazon HQ2 project was announced. While the state government took the lead in responding to the proposal, it presented the opportunity to bring in people and resources from the private sector to support the project, and to closely examine Delaware’s location and workforce advantages, not just for Amazon, but for other prospects going forward. One of the exciting digital marketing tools that came out of the project was the “Options in Delaware” video. As you can see, while it was developed as part of the Amazon response, it is a great representation of Delaware, and suitable for use in other ways, including recruiting talent to the state.
In addition to setting up an office, the DPP has launched an initial website, deprosperitypartnership.com, that includes basic information about the partnership and Delaware. In the coming weeks the site will be populated with additional information and ultimately become a resource for current Delaware businesses, as well as for those outside the state looking for a great place to expand or relocate.
by James DeChene
The General Assembly entered its last week of the 2017 session with over 130 bills on the ready list, and with more bills being prepped and ready to go. Included in the mix are:
In addition to all of these bills, a budget has yet to be finalized as of this writing, and it remains unclear as to whether there will be a budget in place in time to avoid some sort of continuing resolution to keep the government operational through July. More info to come next week in the aftermath of the end of session.
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, the Small Business Alliance, a State Chamber of Commerce committee focused on the small business community, held their annual Small Business Day in Dover. More than 50 business leaders heard from veteran lobbyist Bobby Byrd, of The Byrd Group, as he gave attendees a primer on how best to convert their message to legislators by effectively lobbying. After, attendees participated in the House Small Business Caucus meeting, which has an excursus on the impacts of the pending budget issues (including education funding, tax increases and the need for expenditure cuts), followed by individual meetings with legislators, a tour of Legislative Hall, and watching the House and Senate conduct their respective business during session.
There was much thoughtful discussion surrounding issues facing the business community, including the impacts of legalizing recreational marijuana, apprenticeship requirements on state procurements, budget issues and modernizing the Coastal Zone Act.
Also this week, the first revenue package to address Delaware's $382 million budget shortfall passed the House. HB 175 would raise $116 million from increases to the corporate franchise tax, and other associated fees. Bills related to apprenticeship mandates and escheat were tabled in committee, to be worked after the upcoming two-week Joint Finance Committee break.
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 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.
This week in the Governor’s office, two businesses were recognized for their support of the military and veterans through their hiring practices and engagement in the community. Started as an effort by the Joint Military Affairs Committee, featuring a partnership by the State Chamber, New Castle County Chamber, and in conjunction with the Central Delaware Chamber’s Military Committee, the Warrior Friendly Business award is presented each year to a small and large business going above and beyond to ensure those in active duty, or returning from duty, have a job to come home to. Memorialized each year on a plaque prominently displayed in the lobby where visitors to our Governor can review their efforts, this year’s winners were Mission BBQ (small business winner), and JP Morgan Chase (large business winner). Many congratulations and thanks to both winning companies.
You may have seen last week a request from the Division of Revenue looking for feedback from those who use their website to make payments. They are in the process of starting to upgrade their site and online services provided, and are looking to the business community for assistance. There is a survey to take, as well as a small group to be formed to provide feedback as well. If you are interested in meeting with DOR representatives, please contact me. To take the survey, visit: https://revenue.delaware.gov/forms/EDI_Survey.shtml
by James DeChene
Recently, the Internal Revenue Service proposed new estate tax regulations that would make transferring interests in family-owned businesses more onerous and costly than under current guidelines.
Proposed Estate Tax Changes
Under current law: Because of the estate and gift tax, many family owned, closely held business owners are challenged in how they can pass on their business interests to their heirs. If a business owner waits to transfer their business at death, the business interest is subject to the estate tax at full fair market value, less the exemption amount.
A popular technique is to gift small ownership pieces over time, such as 10% of a business in one year. That interest is a “minority interest.” The value for tax purposes is also discounted relative to fair market value because control remains with the older generation.
With multiple transfers over time, the entire business can be “gifted” at a minority interest discount. The total amount subject to tax is substantially less than if the entire interest were taxed at death at fair market value.
IRS Proposal: The Section 2704 regulations would eliminate the discount applied to these “minority” gift transfers for closely held, family owned businesses. This is causing a significant amount of concern for family-owned businesses throughout the country, and many are trying to plan around this consequence before the regulations become final.
This is one more example of a major regulatory change, like the recently proposed Treasury Section 385 regulations, that are being attempted at being finalized before the calendar year end and a new administration comes in. We will continue to monitor and provide further updates as they happen.
James DeChene is the Chamber's Senior Vice President of Government Affairs.