by James DeChene
The Dog Days of Summer are upon us. The last two weeks have been filled with national party convention drama, heat waves making for great vacation/beach weather (see you next week, Lewes), and mixed in are polls for the City of Wilmington mayoral and Congressional races, with results showing that many people are not yet focused on local elections. Faster than some sunburns will fade, Fall and the September primaries will be here, and, as the State Chamber has mentioned (repeatedly), there are hot button issues on the horizon next year. Many of them have been outlined in the recent Delaware Business Roundtable’s Growth Agenda (available for your beach reading pleasure), and can help serve as an election guide for the business community to choose who is best served to help guide Delaware into the future. For now, we hope you enjoy your summer, that your AC is working, and that you’ll spend some time reading up on your specific candidates up for election.
Delaware Growth Agenda: State Must Pursue New Long-Term Approach To Economic Development Over Next Five Years
By Robert Perkins
Executive Director, Delaware Business Roundtable
PerkinsDelaware must fundamentally change its approach to economic development and nurture a growing entrepreneurship base in the face of intense competition for jobs, investment and talent, according to a framework commissioned by the Delaware Business Roundtable released on Wednesday.
The Delaware Growth Agenda provides the private sector’s strategic framework for pursuing a new long-term approach to economic development in the state, including public policy recommendations centered on three strategic goals to be implemented over the next five years.
“The vision of the Delaware Growth Agenda is that our state will focus its efforts on becoming a global magnet for leading-edge technologies, talent and investment,” said Mark Turner, chairman of the Delaware Business Roundtable and president and CEO of WSFS Financial Corporation. “This framework puts forth clear-eyed, achievable strategic goals and strategies that can accelerate Delaware’s economic engine – but only if the public and private sectors work together to make that vision a reality.”
The non-partisan, forward-looking framework is based on interviews and guidance from more than 100 Delawareans, including representatives from economic development organizations, higher education institutions, businesses, government, labor and non-profit organizations. The framework envisions an even stronger and more robust partnership between the public and private sectors to guide future success.
The framework recommends:
Building an entrepreneurship and innovation ecosystem. This includes bolstering federal, state and private investment in higher education, and emphasizing the healthcare, science and technology fields, engineering and entrepreneurship programs. The framework calls for the creation of an “Innovation District” as a destination for entrepreneurs and startups, as well as for marketing Delaware to regional and national angel investors and risk capital networks.
Pursuing a new approach to economic development. The framework calls for establishing a public-private economic development organization, crafting a new comprehensive statewide economic development strategic plan, and a marketing campaign that pursues new investment and jobs in key industries – including financial services, business services, education and knowledge creation, manufacturing, and distribution.
Enhancing Delaware’s business climate. The Growth Agenda says the state must ensure Delaware’s infrastructure meets the needs of a 21st century economy, including updating the Coastal Zone Act to provide greater flexibility in redeveloping brownfield sites. The framework also calls for improving the state’s public education system, taking a leadership role in facilitating more efficient development and permitting processes, and creating a Futures Council of Delaware.
The full recommendations under each of the goals and strategies can be found in the framework, which was developed collaboratively by TIP Strategies and the Delaware Business Roundtable. TIP Strategies is an economic development strategy firm that has worked with states and communities across the country.
In addition to presenting a strategic vision and goals, TIP Strategies also examined Delaware’s economic health over time compared to other states in the region.
Among the findings of the framework:
We are facing real challenges, but the Growth Agenda encourages a reset of economic development in Delaware over the next five years. First and foremost, things cannot continue as they have because Delaware’s existing companies – nor the industry sectors themselves – can be counted on to serve as engines of future growth. We must take a new approach, and the public and private sectors must work together to get it done.
The Roundtable’s intention is for the Delaware Growth Agenda to spark a much-needed discussion of how to expand economic opportunity and jobs throughout the state during the 2016 election cycle that will result in concrete action thereafter. It comes on the heels of the Roundtable’s 2015 study of state finances, which clearly articulated the structural budget challenge facing the state as it wrestles with unsustainable revenue sources and spending patterns and strongly recommended that Delaware focus on expanding economic growth as one part of the solution.
The Delaware Business Roundtable plans to continue to promote sustainable economic expansion and growth in Delaware.
About the Delaware Business Roundtable
The Delaware Business Roundtable is a non-partisan, volunteer consortium of CEOs whose companies collectively employ over 75,000 people in Delaware. Since its inception in 1981, the Roundtable’s broad mission is to enhance the quality of life in Delaware by promoting commerce, job creation and select public policy issues. In recent years, the Roundtable has been a leading supporter of public education transformation and entrepreneurs in Delaware.
About TIP Strategies
TIP Strategies, Inc. (TIP) is a privately held economic development consulting firm, with offices in Austin and Seattle. Established in 1995, TIP is committed to providing quality solutions for public and private sector clients. TIP has completed more than 300 engagements across 38 states and 4 countries. The firm’s primary focus is strategic economic development planning. In addition, TIP has experience with entrepreneurship, target industry analysis, workforce, and redevelopment. The firm’s methods establish a clear vision for economic growth. Community leaders across the country have embraced the TIP model of Talent, Innovation, and Place to achieve successful and sustainable economies.
Delaware State Chamber of Commerce Applauds “Delaware Growth Agenda” Released by Delaware Business Roundtable
Delaware State Chamber of Commerce President & CEO Richard Heffron released the following statement applauding the Delaware Business Roundtable releasing their Delaware Growth Agenda, which outlines steps Delaware should take to secure its economic future.
“Today’s release of the Delaware Business Roundtable’s Delaware Growth Agendareinforces what the Delaware State Chamber of Commerce, and other business groups, have been saying—that in order for Delaware to have sustained and successful long-term economic growth there needs to be a commitment by elected leaders to make difficult decisions.”
“The industries that have long defined Delaware are changing, and Delaware must adapt and change to remain relevant to business on decisions to expand or relocate here. A renewed commitment to education and workforce development, developing an entrepreneurship climate, continuing a nimble approach to economic development and focusing on pro-business legislation and regulations all must be a part of a successful Delaware.”
The Delaware State Chamber of Commerce is dedicated to promoting an economic climate that strengthens the competitiveness of Delaware businesses and benefits citizens of the state. Founded in 1837 as the Wilmington Board of Trade, the Delaware State Chamber of Commerce has a long history as the largest, most influential business organization in the state. Learn more at www.dscc.com.
by James DeChene
The 148th General Assembly closed out its session in the early hours of July 1st with its mandated legislation, notably the budget, bond bill and grants in aid, finalized.
There were a few notable pieces of legislation important to economic development this year that passed, namely:
In order to provide the bulk of the shortfall funds required in bond and grants in aid specifically, budget writers were forced to raid funds, rely on inversions from unspent accounts and to restrict new program spending to cover, including using the $6 million Governor Markell set aside to help cover redistricting costs associated with the Wilmington Redistricting plan. The main takeaway from the ending this year was that next year, especially the budget, will be difficult.
Issues for Next Year:
Economic Development – Coastal Zone Modernization, this year the State Chamber raised awareness of the need to modernize the Coastal Zone Act, specifically for sites located north of the C&D Canal to make Delaware more competitive with surrounding states to create jobs here. The issue gained no traction in the General Assembly this year, despite a broad coalition of businesses and business groups calling for action. The State Chamber, along with other coalition members, will continue the process into next year with the hopes of legislation passing.
Budget and Tax Policy – The State Chamber’s Tax Committee is working this summer to help draft recommendations for the next governor to promote pro-growth policy for Delaware. With DEFAC projecting low revenue growth for the next few years, the time is ripe to review how Delaware collects and spends taxpayer dollars.
by James DeChene
Legislators in Dover started their work week Tuesday with the news that revenue projections from DEFAC had once again fallen, with Monday’s report showing a $21.6 million projected shortfall. As a result, money allocated to Grant in Aid and to the Bond Bill was reduced approximately 40% from what Governor Markell had proposed in his recommended budget. The operating budget was finalized by the Joint Finance Committee this week, and now the final Bond and Grant in Aid meetings can start their wrap up into next week.
Also this week:
The House passed HB 396, nicknamed “The Rocket Docket”, which would allow developers of certain projects pay a fee to expedite their review processes through the counties. It now awaits action in the Senate.
Debate in the Senate stalled on HB 308, a bill that would modify worker’s comp exclusivity in work related, employee auto accidents. That bill will resume debate next Tuesday.
The State Chamber testified against a bill mandating contractors, and their subs, have apprentice training programs in place prior to bidding on all state funded projects. Currently the state does not provide approved apprentice training programs for nearly half of the 26 recognized trades, leaving questions as to how any contractor could bid work for those jobs. The legislation also boxes out established, qualified companies due to their size if they do not have the operating budget to constantly take on apprentices. The bill was released from House Labor Committee and awaits action in the House.
Next week will be the last of the 148th General Assembly. Stay tuned for updates on final budget language, last minute movement on bills and the end of session wrap up.
State Senator Karen Peterson announced her retirement this week, to be effective immediately after the end of the 148th General Assembly, July 1st. With a candidate filing deadline of July 12th, those wishing to run face a tight time frame to announce, file and mount an effective campaign.
This week several bills of interest to the business community were acted on. HB 327, the Crowdsourcing Bill, passed the Senate and now awaits Governor Markell’s signature. The bill would allow for Delawareans to invest in startup companies, and these companies can raise up to $1 million. State Chamber supported legislation (HB 418) to correct a funding calculation issue for the Workforce Investment Board training fund was released from the House Labor Committee. It will go to a House floor vote soon. Legislation involving hospitals and care givers was released from the House Health Committee still containing a Chamber opposed amendment stripping liability protections for hospitals where upon discharge the lay caregiver of the discharged patient makes a mistake in care resulting in patient injury. With 6 days remaining this legislative session, and one more DEFAC meeting left to firm up the budget, expect much more legislation to be worked.
Louis L. Redding City/County Building
800 N. French Street
Wilmington, DE 19801-3537
phone: (302) 576-2140
fax: (302) 571-4071
We are pleased to invite you to attend the City to Work Job Fair. Please mark your calendar now to join us on Wednesday, September 7, 2016, for this opportunity to recruit leading candidates in all fields. The job fair will be held at the Louis L. Redding City/County Building from 10am-5pm.
The purpose of this event is to connect you, the employer, with potential employees – our residents. Our residents are an educated, talented and skilled workforce. City to Work is our way of connecting Wilmington residents to employable opportunities while also reducing the cost of businesses to advertise vacant positions. The City of Wilmington hosts a FREE job platform to leverage social recruiting for locally based companies. Please visit Wilmington.TweetMyJobs.com to register your business and post your job openings at no cost.
We look forward to seeing you at the upcoming job fair. You will be provided table space and chairs for your business display (if needed). Let us know if you have any other needs including access to electrical outlets or signage upon confirming your attendance. Please confirm your attendance to Edythe Pridgen at firstname.lastname@example.org by Friday, August 19, 2016.
City to Work Job Fair
Wednesday, September 7, 2016
Louis L. Redding City/County Building
800 North French Street
Wilmington, Delaware 19801
Councilman Darius J. Brown
Third Disctrict, Wilmington City Council
On April 11, 2016, White House officials in Washington launched the Fair Chance Business Pledge, which represents a call-to-action for all members of the private sector to improve their communities by eliminating barriers for those with a criminal record and creating a pathway for a second chance.
Click here to read the Fair Chance Business Pledge.
by James DeChene
Legislators returned to Dover this week working to finalize the remaining bits of business, including the budget, prior to adjourning at the end of the month. Congratulations are in order for Representative Debbie Hudson (R-Fairthorne) and Senator Brian Bushweller (D-Dover) for winning this year’s Small Business Guardian award presented at the State Chamber’s End of Legislative Session Brunch.
Of note this week, was an economic development bill (HB 396) that would streamline the permitting process for any industrial or office project (but not residential or commercial) that did not require a rezoning and would be greater than a certain size (75,000 square feet or would create at least 60 permanent jobs). A special expedited review process would be made available for a fee that would guarantee review and comments from the County within 2 weeks from the initial plan submission, and review and comments within 2 weeks from final plan submission.
There would still need to be a Planning Board hearing, and review by State agencies through PLUS (Preliminary Land Use Service), and this new, expedited process would signal a real commitment by the counties to work with major new employers and demonstrate that the State is serious about economic development and putting an end to what is perceived as an interminable review process that does not compare favorably with surrounding jurisdictions.
The State Chamber testified in support of the bill, which seeks to replicate successes Middletown has seen with companies like Amazon and Johnson Controls, which now goes the House floor for a vote.
by James DeChene
The Mercatus Center at George Mason University released their Ranking the States by Fiscal Condition 2016 report, which compares the 50 states and Puerto Rico, and Delaware was ranked 38th (last year Delaware was ranked 30th). The study ranks a state’s fiscal health based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits. Delaware’s fiscal solvency was based on information in five separate categories: cash solvency, budget solvency, long-run solvency, service-level solvency and trust fund solvency.
Unfortunately, Delaware was considered a “big mover.” According to the study:
To be considered a “big mover,” a state must have shifted position by more than five spots between the 2015 and 2016 editions (which use the latest available data, from fiscal years 2013 and 2014, respectively). A change in ranking of five or fewer places is not considered a significant change in the underlying metrics. For the most part, states’ overall fiscal performance remained relatively constant. Only Delaware and Iowa dropped significantly in the overall ranking of fiscal condition.
On a short-term basis, Delaware has between 1.90 and 3.23 times the cash needed to cover short-term liabilities. Revenues cover 98 percent of expenses, producing an operating deficit of $195 per capita. On a long-run basis, Delaware has a negative net asset ratio of −0.03, and long-term liabilities account for 51 percent of total assets. Debt totals $3.02 billion. On a guaranteed-to-be-paid basis, unfunded pension liabilities are $8.03 billion, and other postemployment benefits (OPEB) add a further $5.66 billion in unfunded obligations.
This study dovetails with what the State Chamber, and others, have been warning of for the last few years. While our short-term obligations are currently covered, Delaware’s long-term fiscal health is seriously compromised. Study after study shows that without significant structural changes to the budget, how revenue is collected, and how that money is spent, Delaware faces a crisis situation in the near term.
by James DeChene
When members of the General Assembly return from break on June 7th, they will be facing a $70 million budget shortfall between current revenues and the governor’s proposed budget. The Joint Finance Committee will meet this week and next to continue to iron out what funding will look like this year. It is important to note that the funding wish list in front of JFC totals roughly $160 million, meaning there is almost a quarter billion dollar gap between what legislators have requested above the governor’s recommended budget and what they can afford.
The even more troubling, yet under-publicized, piece of DEFAC’s May meeting forecast is for the negligible economic growth, less than 1% each year, over the next three years. This may be the textbook definition of a flat economy, and is troubling for its long term impact on future budgets. The problem with a flat revenue projection is the state still faces dramatic increases to its costs, most notably in health care expenses, without seeing commensurate growth in available revenues. Close to double digit increases are expected each year for the foreseeable future in that space alone, not to mention potential 30% increases in state funded construction projects if HB 283 is passed this year.
The members of JFC have a tough task in front of them, made more difficult by an election year. The last few years have seen last minute funding battles for programs totaling less than one half of one percent of the overall budget, and this year will most likely be no different. Difficult choices will need to be made not only this year, but also by the next governor and general assembly, on how to jump start Delaware’s economy. The State Chamber, the Delaware Public Policy Institute, The Delaware Business Roundtable and others have ideas we will bring forward for discussion and debate. Building off of the Delaware Public Policy Institute’s study on public employee compensation (found here), expect more focus on areas for successful economic growth and development. We understand there are no easy answers, but we also know that employers across the state have faced similar choices and have had to make their own difficult decisions to adapt and survive.
James DeChene is the Chamber's Senior Vice President of Government Affairs.