By James DeChene

As reported this week in the News Journal, Delaware received unfortunate news from FERC regarding the Artificial Island cost allocation proceedings. The agency has decided not to intervene in the cost allocation debate on whether Delaware rate payers should shoulder roughly 90% of the cost burden of constructing a power line across the Delaware River. Back in December, in response to the claims raised by the Delaware and Maryland Public Service Commissions (Docket EL15-95-000), regarding the cost allocation made by PJM as to who would pay for a new transmission line to be constructed between New Jersey and the Delmarva Peninsula, FERC determined that the cost allocation for Artificial Island filed by the PJM transmission owners may not be just and reasonable. FERC therefore accepted the cost allocations but delayed implementation for 5 months (subject to refund if FERC denies the cost allocation) and established a technical conference with PJM to determine whether there is a certain category of reliability projects for which the solution-based DFAX may not be appropriate and whether another cost allocation method could be established for such projects.

With that 5 month deadline came with it FERC’s response, along with news that the project will now exceed $400 million dollars, an increase of $135 million over last cost estimates. The ruling will be appealed, and the potential for a court case challenging the cost allocation remains prominent.
More details to follow as we know them.

By James DeChene
This week the Delaware Public Policy Institute released a study comparing the compensation packages between state employees and their private sector counterparts, excluding teachers and public safety officers as their compensation and benefit plans may differ from the rest of other state employees. The study found that on average, state employees receive 12.4% less in their paycheck, but that their compensation benefits package, including health care and pension, averages 53-102% over those working in the private sector.
The purpose of the study was not to make a statement as to the role state workers play, their effectiveness or to their necessity. Rather, the intent of the study was to provide budget and policy makers critical information they need to ensure Delaware’s long term fiscal health. It is conventional wisdom that state workers make a little less, but enjoy robust benefits compared to the private sector. The actual numbers surrounding how much is spent on benefits come as a surprise, however. Driven by increases in health care coverage costs and guaranteed pension funding, a large percentage of overall compensation resides in areas requiring reform.
We hope this study is helpful for budget and policy makers to get a true and impartial sense of how the numbers look for over 52% of the budget—personnel costs. Both the Expenditure Review Committee and the Delaware Business Roundtable drew attention to these cost drivers. The State Chamber of Commerce has supported the Markell administration concept of transitioning to Health Savings Accounts for new state employees and to have state employees contribute an increased amount to their health care coverage.
The issues regarding long term financial liabilities the state faces with regards to state employee compensation are not going away, and they will continue to increase each year. This week DEFAC released their economic forecast and state revenues are not expected to increase more than 1% over the next three years. With a flat economy and escalating health care and pension costs, this issue will reach a critical mass sooner rather than later. We urge policy makers to make the difficult decisions now while they are hard versus waiting until they become impossible.

By James DeChene
This week saw the General Assembly return from their Easter break.
Of note to the business community, HB 308 was heard in, and released from, the House Administration Committee on Wednesday. The bill was written in response to a Superior Court decision involving a worker’s compensation claim made by a state employee, who also attempted to collect on the state’s underinsured motorist policy to help cover medical expenses. The court found that the employee was only entitled to collect worker’s compensation and granted the State a motion of summary judgement. However the judge asked for legislative clarification regarding the instances where other insurance policies could be utilized (such as uninsured/underinsured, short-term and long-term disability). The issue at hand is that the legislation is written broadly enough that it potentially impacts private sector insurance rates. The State Chamber testified at the hearing, raising questions as to impact on other insurance rate increases as a result of workers compensation insurance no longer being exclusive. The bill now heads to the House floor after the JFC/Bond Bill hearings break for a full vote.
Until next week…

By Mark DiMaio

Last spring we lost our dear friend and colleague, John Taylor. John was an integral part of the Chamber family and his leadership as president of the Delaware Public Policy Institute moved Delaware forward on significant policy issues. Most importantly, John had a deep dedication to improving education in Delaware. Throughout his professional career, John was an educator. He began his career as a teacher, then served as the assistant to superintendent for Wilmington’s Board of Education. John’s education background and his ability to share information and make connections served him well as he rose to become the editorial page editor for The News Journal.

As founding member of the Vision Coalition, John’s leadership and directness were instrumental in building an impactful public-private partnership advocating to improve education in Delaware. His leadership style was always straightforward, clear-headed and often unwavering. At the same time, he was a humorous and truly humble man.

In honor of John’s leadership and commitment to education, the Delaware State Chamber of Commerce has created the John H. Taylor Jr. Education Leadership Award to recognize someone in the community who has provided sustained leadership in advancing Delaware education and who, by doing so, has also made our community a better place to live and work.

This year’s Superstars in Education program is proud to present the inaugural John H. Taylor Jr. Education Leadership Award to Dr. Jack P. Varsalona, president of Wilmington University. We recognize Dr. Varsalona for his 40 years of leadership, vision and personal contributions advocating to improve Delaware education. He is one of the founders of the Delaware Association of Independent Colleges and Universities and a member of the Ursuline Academy Board of Trustees. He is also a member of the Fresh Start Scholarship Foundation Advisory Board in addition to being the 2013 recipient of the Fresh Start Scholarship Foundation’s Muriel E. Gilman Championship Award for his outstanding contributions to the success of the Foundation. Varsalona’s passion for excellence in education is also apparent in his work as a team chair with the Middle States Commission on Higher Education, the accrediting body that helps other colleges and universities to maintain high scholastic and student life standards.

Varsalona is heavily involved with community organizations, including the United Way of Delaware, the Wilmington Renaissance Corporation and First State Innovation. He also sits on the board of directors for the Boys and Girls Club of Delaware. In 2014, Varsalona was the inaugural recipient of the Father Roberto Balducelli Appreciation Award for his extensive work in the Italian-American community and support of Italian artistry. Varsalona was named Advocate of the Year by Goodwill of Delaware and Delaware County in May, 2015, for his substantial scholarship support and other contributions to Goodwill’s mission of helping individuals to overcome barriers to improving their lives.

The John H. Taylor, Jr. Education Leadership Award will be presented on Monday, May 9 at the Superstars in Education Reception & Awards Ceremony.

Click here to learn more.

by James DeChene

This week, the Chamber’s Environmental Committee hosted Delaware Department of Natural Resources and Environmental Control Secretary David Small who provided an update on the various initiatives the agency is engaged in. Included in the conversation was the status of the State Supreme Court review of how storm water regulations were promulgated, measures the agency is taking to replenish sand lost as a result of winter storm Jonas and the subsequent damage to the inland bays caused by that storm, and potential increases in usage fees for the maintenance of wildlife areas.

Also discussed were the funding issues surrounding Hazardous Substance Cleanup Act (HSCA) sites and the recent University of Delaware study on HSCA return on investment, which is estimated to be a $16 return for every $1 spent statewide, and at $19 for money spent in New Castle County. The HSCA fund has seen reduced funding in recent years as gas prices have dropped resulting in a decrease in the amount of dedicated taxes paid by petroleum refineries.

The Secretary also heard from Chamber members on the need to modernize the Coastal Zone Act. This education effort will explain the economic development opportunities modernization will provide. For more information on the event, or to learn more about the Chamber’s Environmental Committee, contact James DeChene at [email protected].