by James DeChene
Today, Wednesday, August 2, 2017, Governor Carney signed into law HB190, legislation modernizing Delaware’s Coastal Zone Act. The Delaware State Chamber of Commerce would like to thank Governor Carney, legislation prime sponsors Representatives Osienski, Heffernan and Gray, and Senators Townsend and Pettyjohn, along with the 52 members of the General Assembly who voted for the bill, for their efforts in passing such important legislation.
The State Chamber of Commerce would also like to thank our members who took the time to weigh in with their support for the legislation, and for recognizing the positive impact it will have on Delaware’s economy.
“I appreciate the efforts of our partners in the business and labor community coming together to help get this bill across the finish line,” said Rich Heffron, President of the Delaware Chamber of Commerce. “These types of partnerships will be key to securing Delaware’s long-term economic future.”
by James DeChene
Two articles were printed highlighting two sides of the same coin on Delaware’s budget and economy. The first states that while Delaware’s unemployment rate is holding steady at 4.7%, we are struggling compared to the rest of the nation. Not only that, but our job creation pace slowing, with a sluggish growth rate of less than .1%.
The other story was of the purchase of the Hercules building in Wilmington for a third of its mortgage note, at $22.3 million (the note was $65 million). That was for a building with a roughly 50% occupancy level. This adds to the growing pool of available, and unused, office space in Wilmington. This paints a fairly bleak picture of Delaware’s overall recovery and what the budget will look like next year.
Work on the public private partnership (P3), also known as the Delaware Prosperity Partnership (DPP), to reorganize DEDO continues, with next steps including the Governor naming board members. The hope is to have the organization up and running by the end of the year.
The first Ecological Extinction Taskforce met this week. Attendees heard a presentation from UD professor Dr. Doug Tallamy on the reduction of a number of Delaware species. The next meeting is August 7.
by Mark DiMaio
We Work for Health Delaware (WWFH) is a grassroots initiative to illustrate how biopharmaceutical and medical innovation work together to create a strong and vibrant economy. WWFH Delaware brings together business, labor and community partners seeking to raise awareness about the vital role biomedical research plays in delivering life-saving technology, as well as well-paying jobs. We Work for Health Delaware took to Capitol Hill this week to meet with the Delaware Federal delegation to discuss renewing the Prescription Drug User Fee Act (PDUFA); elimination of the Medicare Independent Payment Advisory Board (IPAB); and maintaining a non-interference clause in the Medicare Part D drug program. WWFH Delaware also stressed the importance of keeping Delaware in the forefront of biopharma innovation as a driver of economic development and well-paying jobs for the state.
The WWFH Delaware delegation was comprised of Reverend Robert Hall, Executive Director, Delaware Ecumenical Council on Children & Families; James Maravelias, President, Delaware AFL-CIO & WWFH Delaware Co-Chair; Helen Stimson, President, Delaware BioScience Association & WWFH Delaware Co-Chair; and Mark DiMaio, Director of Grassroots & Research, Delaware State Chamber of Commerce. The group met with Senator Carper, Senator Coons and Congresswoman Blount-Rochester and their staffs to discuss WWFH’s key issues and how elected leaders have a direct impact on policies that help Delaware’s
research and development organizations prosper.
by James DeChene
As widely reported, the FY2018 budget passed with a mix of new revenue and a number of expenditure cuts and other reductions. The ratio was about 48% new revenue ($182.7 million) and 52% cuts ($195.1 million), roughly meeting Governor Carney’s goal of a 50-50 split to fill a budget gap of $377.8 million.
The new revenues are fairly easy to account for: increasing the corporate franchise tax ($116.1 million), raising the alcohol excise tax ($5.2 million), raising the tax on tobacco products ($11.9 million), and raising the realty transfer tax ($45.6 million), changes to insurance policy charges ($4.6 million) and one-time special funds ($3 million).
Tax cuts, and reductions of proposed increases, came from, among other things:
Simply put, nothing contained in the revenue package is designed to be a fix for Delaware’s structural issues, and the list of funding issues the state faced this year only increase next year, including:
The Delaware State Chamber of Commerce believes in the time available between now and the end of 2017 should be focused on discussions and planning on how to address these issues in the next part of legislative session. Waiting to solve budget crises with a complicated series of steps, such as the removal of itemized deductions, or looking for new, last minute, sources of revenue makes for ill-formed policy. The ability to have in-depth discussions regarding the impacts of tax increases and spending cuts will go a long way to helping set Delaware on a path to prosperity.
by James DeChene
The General Assembly finished out, for the first time, in what is called “extraordinary session” early Monday morning by passing a budget, a revenue package to pay for it, grants-in-aid, and the bond bill.
Some of the highlights from the last few days in Dover include:
Also of note was the passage of a number of State Chamber priorities, which provides good news for our members. They include:
An important item to note: None of these increases are structural changes or work to address Delaware’s long term revenue and spending issues. Many of the same issues the General Assembly faced this year remain, with the added complication of next year being an election year. It remains to be seen the impact this year will have on future budgets, but the expectation at this point is that next year will be another painful year.
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
This week saw the passage of two Chamber legislative priorities in the House—modernizing the Coastal Zone Act and enabling language to create a public-private partnership to replace DEDO’s current structure. Both measures now move to the Senate for consideration, and votes, next week. Many thanks to those of you who wrote letters supporting HB190 (Coastal Zone). If you haven’t yet written to your Senator, you can do so here: www.dscc.com/takeaction.
Also this week, a series of tax bills were released from the House Revenue and Finance Committee. These bills raise the Personal Income Tax levels; remove itemized deductions (replaced with a higher standard deduction); gradually raise the age someone has to reach before they are eligible for the $12,500 exclusion of income for pensions and other retirement income; raise the excise tax on beer, wine and spirits; increase the tax on tobacco products; and increase the LLC tax. These bills will become part of the discussion on how to balance a roughly $350 million budget shortfall, and discussions continue on what expenditure offsets will be made to balance a 50-50 split to cover the gap.
Next week is the last week of session for 2017. Hope remains that a budget deal can be reached prior to June 30th to stave off coming up with a plan to continue budget negotiations into July.
by James DeChene
Wrapping up the week, with seven legislative days left, the General Assembly still has much to do if they plan to adjourn on June 30th. The most important of those tasks remains hammering out a budget deal that can pass. Negotiations continue, but each side remains committed to issues difficult for the other to support. These items include removing prevailing wage from state contracted construction works projects for a period of three years, and raising the Personal Income Tax Rate, which would also include a new top rate of 6.96% for those with incomes above $150,000. Leadership meetings continue, and JFC still has a lot of work ahead of it.
The final DEFAC numbers for this budget session come out on Monday June 20th. Barring significant increases to the Corporate Income or Corporate Franchise taxes, or a surprise escheat settlement, or some other unexpected windfall, revenues are expected to remain flat, meaning our budget gap will remain somewhere in the neighborhood of between $350-400 million.
HB190, the bill to modernize the Coastal Zone Act is expected to see a House vote on Tuesday, and our hope is HB226, the bill to reorganize DEDO into a P3 will also see a House vote next week. SB10, the bill to increase Delaware’s minimum wage was taken off the Senate agenda and not voted on this week. SS1 for SB76 was heard in the Senate Labor Committee, which would require recognized apprenticeship training programs for companies performing state construction work.
Much more to come next week. Stay tuned.
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.
James DeChene is the Chamber's Senior Vice President of Government Affairs.