By Tyler Micik

​The General Assembly returns on Tuesday, January 11th for the second leg of the 151st session. It’s likely a large portion of business will be conducted virtually--at least for the first few months--given the rise in COVID-19 cases due to the Omicron variant.

It is an election year and a variety of bills are expected to be considered, all of which offer implications for businesses, large and small, across every industry. Among these proposals are Paid Family and Medical Leave and recreational marijuana legalization which were first introduced last year.
 
As the General Assembly gavels into session next week, the Delaware State Chamber of Commerce offers our 2022 policy priorities, which focus on four pillars that are important to maintaining and creating a healthy business environment in Delaware: workforce, fiscal policy, economic development, and environmental policy. Guided by our leadership and members, these represent our top areas of focus in 2022 and will serve as a roadmap for the policies and regulations we plan to support.

Providing us your feedback, sharing your stories, and joining one of our committees is the best way to help us shape policy in the First State. Working together to cultivate an environment where companies can grow and invest in Delaware. This is the best way to secure Delaware’s economic future. Join us.

By James DeChene, Armitage DeChene & Associates

PERHAPS YOU’VE SEEN the videos and pictures of an elected official touring a production plant, wearing a suit and tie, with a hard hat and goggles, and wondered, “Why would they (the company, or the elected official) do that?”

I’ve had the opportunity to be on tours like that for some very interesting companies including: walking through a nuclear submarine prior to its shakedown run, learning how a pharmaceutical company combats
counterfeit versions of their products globally, seeing how a UPS facility works, touring a major fabricator of intricate (and large) metal works projects, the Nylon Mile in Seaford, and more. Each of these events gave the
attendees an in-person look at how the “sausage is made”—note, if there are any sausage making facilities in Delaware, I’d love a tour. It’s a great opportunity to see how concepts come together and make a business successful.

Prior to the COVID-19 pandemic eliminating in-person meetings for over a year, the State Chamber created a successful Member-to-Member program. The concept is simple, but the outcomes are important. Work with Chamber staff to set up a meeting date to host your elected official—state House/Senate member—for a lunch/coffee and tour of your facility or office. That meeting is your chance to showcase your company, employees and the work they do, provide real examples of what the impact of legislation from Dover has on Delaware companies, and to build relationships with your representatives to provide feedback in the future.

I’ve written before on the concept that employers tell their story the best—and that’s the case if you’re a small firm looking to grow or if you’re a large, multi-national firm with headquarters or other significant footprint in Delaware. The current list of legislation to be considered next year, along with what will be crafted and introduced, will most likely impact many companies across the state. These meetings are a great opportunity to help educate and provide background to decision makers.

A few examples of issues that remain pending into next year:

• HB 150: Legalization of recreational marijuana
• SB 1: Healthy Delaware Families Act, which requires employers to provide mandatory family medical leave to employees
• HB 205: Delaware EARNS Act that establishes a mandatory employee IRA savings program
• HB 256: Creates two new top personal income brackets, while combining some lower brackets
• HB 94 / HB 266: Related to tipped wages

This week the General Assembly returned from budget break. Of note was the introduction of SB15, legislation to increase Delaware’s minimum wage. If passed, starting in 2022 the minimum wage would be $10.50, $11.75 in 2023, 13.25 in 2024, and reach $15.00 in 2025.

A few months ago the Chamber sent a survey to members asking the impact these wages would have on their businesses. If you have current feedback based on these numbers and timing, please let Tyler Micik know. In addition you can provide public comment at next week’s Senate Labor Committee (time TBD) to let legislators know how SB15 will impact you and your employees.

The State Chamber’s Environmental Committee also received a win this week. The committee recently came to an agreement with DNREC regarding their proposed changes to the Brownfields Development Agreement (BDA). The DE Brownfields statute was enacted in the early 1990s to promote the redevelopment of historically contaminated and abandoned sites, and by all accounts the program has been a success. The State Chamber advocated against revisions in the language of the agreement that would impose greater liability on brownfields developers than the original statute, potentially deterring the development of abandoned sites. The State Chamber’s recommendations were taken into consideration and the problematic revisions were dropped. This is good news for brownfields developers because it continues the liability protections contemplated by the original Brownfields legislation.

Provided by Delaware Technical Community College

On August 3, 2020, Governor John Carney signed Executive Order #43 (E043) creating the Rapid Workforce Training and Redeployment Initiative to assist Delaware workers and their families who have lost jobs and income due to the COVID-19 crisis. In partnership, the Delaware Department of Labor, Division of Employment and Training, and Delaware Workforce Development Board issued a funding opportunity to provide guidance on the workforce training services.

Through this program, known as the Rapid Workforce Training and Redeployment Training Initiative, Delaware Technical Community College was awarded funding to provide free workforce training in the areas of healthcare, technical training, and transportation between October 2020 and March 2021. All training programs are offered at no cost to students.

Healthcare programs include training for certified nursing assistants, hemodialysis technicians, dental assistants, and more. These courses will be offered in partnership with Polytech and Sussex Tech Adult Education divisions. For more information on the healthcare courses, visit http://go.dtcc.edu/WorkforceHealthcare.

The technical training and transportation programs include construction technology, HVAC technician, and transportation. More information on these programs can be found at http://go.dtcc.edu/TechnicalTraining.
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The programs are offered at campuses across the state. Courses are offered in a hybrid format, with students participating in both remote and in-person instruction.

“Delaware Tech is proud to offer this training at a time when many Delawareans are seeking educational opportunities to gain skills and access to jobs,” said Paul Morris, associate vice president of Workforce Development and Community Education. “We look forward to working with our partners and the State to provide the high-quality training that our workforce demands.”

For more information on all of the Rapid Workforce Training offerings, visit https://www.forwarddelaware.com/.

By Mike Quaranta, President, Delaware State Chamber of Commerce

Almost overnight, the COVID-19 pandemic shifted much of our lives online — from education and work to healthcare and retail shopping. And remarkably, our broadband infrastructure performed superbly, helping families across Delaware adapt to these seismic changes.

But many Delawareans are stuck on the wrong side of the digital divide – lacking a home broadband connection for different and sometimes complicated reasons. It’s a problem that needed to be fixed even before the pandemic, and one that has more urgency now.

Although 98 percent of Delaware’s communities are wired for broadband and we have the fastest average internet speeds of any state, only 76 percent of Delaware residents actually subscribe to broadband at home.

Many factors contribute to this broadband “adoption gap.” When unconnected Delaware households are asked why they don’t subscribe, more than 60 percent say they just don’t see the need for, or have any interest in, high-speed internet. Sometimes non-adopters may prefer their mobile service. And one quarter of Delawareans don’t have a computer at home.

To help address this challenge, most major broadband providers have established programs to offer low-cost broadband ($10 to $15 per month) to low-income customers together with crucial digital literacy training and discounted computers to help spark interest. These programs have helped millions of low-income Americans get online over the past decade, including many right here in Delaware. And since the start of the pandemic, many providers have gone farther – opening up Wi-Fi hotspots to the public and even offering free home service for the most vulnerable customers.

Still, we need to better understand why broadband has failed to capture the imagination and interest of so many across our state, despite the widespread availability of subsidized discount programs. This is a critical sociological issue we need to solve.

In addition, in some of our state’s rural, downstate communities, the problem is less about broadband adoption rates than with broadband availability. Longer distances and fewer customers-per-mile make broadband infrastructure cost-prohibitive without public investments.

Here in Delaware, Governor John Carney’s effort to bring wireless broadband to over 127,000 homes and businesses in Sussex and Kent counties was an important step forward. More recently, Delaware’s Department of Technology & Information (DTI) and Department of Education have committed over twenty million dollars of CARES Act funding to help fast-track broadband infrastructure and adoption programs in rural downstate communities.

But like rural electrification a century ago, this rural deployment challenge is national in scope, and requires a national response. This isn’t a problem Delaware should be left to solve on its own; the federal government also needs to step up more.

Congress spent tens of billions over the past decade trying to connect rural America but has made little progress – over 20% of rural Americans still have no access to wired broadband.

The last rural deployment effort launched by the 2009 stimulus bill was half-baked in conception and poorly executed, with billions of taxpayer dollars diverted to build duplicative networks in communities that already had high-speed service, instead of being prioritized for unserved areas.

The federal government’s internal watchdog office criticized the ham-handed effort: “We are left with a program that spent $3 billion, and we don’t really know what became of it,” Government Accountability Office (GAO) investigator Mark Goldstein said at the time.

This fall, the Federal Communications Commission will try again with a new $20 billion effort to deploy broadband in rural communities.

This time, we need to be smarter. Congress needs to focus federal funds where the problem is greatest: areas that currently have no fixed broadband service, including some in Sussex and Kent Counties.

To further buildout rural broadband, we also need to reform the eligibility rules to encourage more competition among broadband builders vying for federal construction contracts. The current, outdated rules, written almost 25 years ago, allow some state and local regulators to steer funds toward their favored providers, instead of those best equipped to get the job done right.

Finally, we need accountability: the Feds should tell us how communities will get needed broadband and in what year – and then set up a system to ensure the goals are met. Too often, pie-in-the-sky rhetoric has been followed by an empty bag of results.

We need to get universal broadband in each and every Delaware community, and get every home to actually sign up. It’s critical for us to compete globally, to grow our local economy, and to address longstanding social and economic inequities.
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We can’t afford to wait any longer. 

By James DeChene, Armitage DeChene & Associates
 
The General Assembly gaveled out of session early on July 1, 2020 in what was the earliest ending in recent memory due to what has been an almost indescribable year to date. With little to no drama on the money bills (Budget, Grants in Aid, and Bond) as they were passed on June 29th, the General Assembly was left to close out a few bills on consent agendas.
 
The Senate said goodbye to retiring Senator Harris McDowell, and the House bid farewell to retiring Representative Quinn Johnson. This means that for next session there will be two new co-chairs for the Joint Finance Committee and both the Senate and House Energy Committees will have new chairs as well.
 
As the General Assembly came back to session in January, members seemed poised to pass a series of legislation that included increasing Delaware’s minimum wage, expanding worker’s rights, and increasing the role and presence of private and public employee unions. Those bills largely went nowhere, and with the COVID-19 pandemic altering how the legislature would work, those bills were placed on hold until next year.
 
The same can be said for legislation the business community supported as well. Efforts to invest in clean water infrastructure, building a new high school in the City of Wilmington, modifying the state’s offerings of Association Health Plans and creating new workforce training platforms (more on that later) all took a pause as well.
 
That said, a number of bills important to the business community were introduced, and some were acted on in the final weeks of this session. They included:

• DSCC SUPPORTED
  • Passed
    • SB249: Title V, which deals with the Clean Air Act and must be reauthorized every three years
    • HB349: Alcohol takeout from restaurants, taverns and taprooms
  • No action
    • HB200: Invests in Delaware’s clean water infrastructure

 

• DSCC OPPOSED:
  • Tabled until next year
    • SB252: Deals with apprenticeship programs
  • Withdrawn
    • HB303: Deals with call centers
  • No action
    • HB110: Recreation marijuana legalization
    • SB105: Proposes an increase in Delaware’s minimum wage
    • SB250: This bill would dramatically increase Delaware’s Renewable Portfolio Standard, and significantly raise utility rates with other provisions

 
In the midst of three months of uncertainty, countless Zoom meetings with Governor Carney, members and staff from his Administration, the chambers of commerce community, stakeholder groups and others, there were a number of positives that were announced, and work completed ahead of schedule.
 
The State Chamber has long been an advocate for rural broadband development and adoption. Last year’s announcement of BlooSurf, a project to bring broadband to western Sussex and Kent counties was met with fierce approval. Originally slated to be completed in 18-24 months, the project was able to be completed in just over 12 by using federal CARES Act funds to speed up the building process. In July 2020, 15 towers are set to be completed. Efforts to promote residential adoption of broadband will roll out soon after in preparation for what could be another school year of distance learning. Now children in these communities will be able to be active participants. Similar broadband adoption efforts are taking place in Wilmington with the similar goal of making sure all children have access to distance learning efforts.
 
For the last year, the State Chamber has pushed for the creation of a workforce training program similar to what has worked with ZipCode Wilmington. A compressed, 40-hour week training schedule focusing on in-demand career paths that will help transition low-skill workers into better paying jobs. While the legislation creating this program was not worked on this year, we continue to work with Governor Carney and his Administration on creative ways to implement such a program, especially in light of the potential permanent job losses related to COVID-19.
 
WHAT'S NEXT?
Between now and January 2021, when the 151st General Assembly convenes, much will have happened:

• Phased openings for businesses and changes in guidelines for the general public will continue.
• How schools – both K-12 and our universities – will open and operate will be defined.
• Chair of the State Chamber’s board of directors, Katie Wilkinson is chairing the business subcommittee on the Pandemic Resurgence Advisory Committee (PRAC). The goal is to identify tactics and resources to manage a resurgence of COVID-19. The group will provide recommendations this fall.
• A better analysis of how the COVID-19 pandemic has impacted the state and its finances will be clearer in September and beyond, which will in part help decide unemployment insurance rates and if tax increases will be on the table next year to shore up state finances.
• Changes will continue who and how many will continue to work from home, changing how commercial real estate and its uses going forward.
• Plus, there will be an election that will determine the make-up, and direction, of the next General Assembly.

 
There remains a great deal of uncertainty as we enter the second half of 2020. What does remain certain, however, is the Delaware State Chamber of Commerce’s dedication to advocacy on behalf of its members – the business community.
 
Look for more opportunities in the coming months to hear from experts on the latest trends as the COVID-19 pandemic, and recovery, continue to evolve. Also look for innovative networking opportunities and other creative ways to get your business noticed. For more information, check www.DSCC.com.

By James DeChene, Armitage DeChene & Associates
By Verity Watson, Ruggerio Willson & Associates
 
The Delaware Economic and Financial Advisory Council (DEFAC) held their May meeting with one more in June before the General Assembly passes the state’s Fiscal Year 2021 budget. While projections and estimates seem to change by the minute, there are a few things to be watching over the summer and into the fall related to economic recovery and what the impact to state expenditures will be in 2021.
 

1. Medicaid Growth: Delawareans eligible for Medicaid increased by 3,000 to a total of 238,000. Financial increases from the federal government are expected to terminate at the end of 2020, so tracking the number of newly eligible Medicaid participants who remain eligible as the economy improves will be an important marker. Even if those 3,000 individuals transition off of Medicaid, 25 percent of Delawareans will still be receiving Medicaid. If you add in state employees, their families, and Medicare almost half of Delaware’s citizens are receiving some measure of publicly subsidized health care. These costs are expected to rise.
2. Unemployment: On May 28, just shy of the Phase 1 re-opening, Delaware unemployment claims surpassed 100,000. As reported by DEFAC, 95,824 claims were filed between March 15 and May 15, with $234,783,265 in unemployment insurance benefits paid. The state share of the cost was $91,932,638. It is expected that Delaware’s unemployment insurance fund will dry up in June, necessitating borrowing from the federal government for future payments. Some of the CARES Act dollars allocated to the state will be shifted to help cover unemployment costs, lessening the amount to be borrowed, but any borrowing will have an adverse impact on next year’s overall spending. It also remains to be seen what unemployment insurance rate increases businesses will face in October.
3. Long Term Impacts on Traditional Revenue Streams:  Long term uncertainty remains about the impact to residential and commercial real estate, the realty transfer tax, and the subsequent impact on those revenue streams. Governor Carney was prudent to classify construction as essential to not only ward off additional unemployment claims, but to keep up with the demand for new homes, road improvements, and new infrastructure.

 
As businesses adapt to large swaths of employees working from home, in many cases working more productively, significant changes to the dedicated physical space businesses require could be on the horizon. Downstream impacts, such as Wilmington’s wage tax, will require creative measures to insure solvency.
 
Corporate income tax and personal income tax filings are both predicted to take a significant hit next year. Personal income tax is the top revenue stream to the state, and while so far high wage workers have not suffered significant job losses, it will be interesting to see what the current 40% layoffs in hospitality workers translates into when federal unemployment ends in July.
 
All told, there remains much uncertainty—whether there will be a resurgence of COVID-19 in the fall and what that economic impact will look like, how changes made during this time related to how employees work will impact real estate, office environments, the work-from-home movement, and how all of these issues, and others, will further impact Delaware’s budget process.

By James DeChene, Armitage DeChene & Associates and Verity Watson, Ruggerio Willson and Associates
 
The spread of and reaction to COVID-19 has the world changing minute by minute, and the business community has come together in these uncertain times to focus not only on keeping their doors open and their employees paid but also continuing to be a helpful presence in their communities.
 
It’s not an understatement to say we are currently navigating in uncharted waters. In an effort to provide some stability for employers during these times, the State Chamber of Commerce, along with other chambers across the state, industry associations and other business-focused groups are committed to finding ways for employers to keep their lights on and continue to operate.
 
Some of these recommendations have already been implemented as of mid-March. Currently the waiting period to file for unemployment benefits has been reduced to seven days. Workers are now allowed to supplement their income with part-time employment while still collecting benefits. Tipped employees are not being classified as minimum wage as long as they claim their tips, increasing them to a higher unemployment benefit rate. Alcohol regulations have been relaxed to increase sales at local restaurants. Zero percent loans have been made available for businesses forced to close under the State of Emergency order.
 
As we continue to see fallout from this crisis, there a few more areas where targeted government action could have very positive impacts for struggling businesses. These include:
 

• Additional changes needed to unemployment insurance:
  • Do not penalize employers when unemployment claims are made. Modification scores should be frozen during this time so businesses who are forced to lay off, especially those closed by executive order, are not further negatively impacted.
  • Increase eligible amounts from $400 to $600 per week. 
• Many businesses have limited access to cash on hand. We should explore ways to keep cash in the hands of businesses through temporary exemptions from gross receipts and payroll taxes. Zero interest bridge loans and small business loans should be explored as a way to infuse businesses with cash.

                          
These unique circumstances demand unique solutions. Other recommendations being floated include the state utilizing its top bond rating to borrow funds necessary to fully fund the unemployment insurance trust fund, to provide employers with rent relief, and to cover payroll taxes paid by employers. As mentioned earlier, access to capital remains a critical component for businesses looking to reopen, to remain open, and stay solvent during these difficult times. The ability for the state to provide this safety net is a much-needed service toward its maintenance of a strong bonding rating was designed to achieve.
 
As we look forward to the eventual reconvening of the General Assembly, the business community’s message is clear—a plea for action only on critical legislation. Budget, Bond, and Grants-in-Aid bills are a priority, as are any bills providing relief to employers, employees, and at-risk citizens. During these uncertain times legislative focus should remain on how we will recover as a community.
 
The impact of the COVID-19 crisis has the potential to dwarf the economic impact of the Great Recession. In 2008-2009, extraordinary measures were undertaken by the Markell Administration and the General Assembly to keep Delaware going, and just a few short years ago we faced a $350 million budget deficit that also took extraordinary measures to overcome. With the help and planning of the Carney Administration and the General Assembly, Delaware can position itself to come out of this crisis better positioned for the future.

by ​James DeChene, Armitage DeChene & Associates

The big news this week for State Chamber members was Governor Carney and House Majority Leader Longhurst announcing a $50 million investment in water infrastructure projects in Delaware. From storm water, waste water, drinking water and flood abatement, these issues will see over $100 million in funding, once matching funds are added. The State Chamber has pushed for a Water Infrastructure bill like this for a number of years. This level of funding will cover the next 5-10 years, instead of having to go back for money year after year. With longevity like this, projects can be bid on/completed in a thoughtful way. This also creates the ability to lump projects together to see more value for money being spent and more efficient, larger outcomes. The State Chamber sees this as how infrastructure money should be used and a great use of one-time money by the Carney Administration. Moreover, this bill not only addresses drinking water in areas like Ellendale and Blades but also flooding downstate and stormwater remediation upstate. 

The Governor also announced $50 million to build a new school and upgrade current schools in Wilmington. During his State of the State address he outlined how the money would be spent. The school would replace Bancroft School and includes funding for major renovations to Stubbs Early Education Center and Bayard School, the two other Christina facilities in Wilmington.

The Governor also announced plans to create a One Stop website for citizens where they can buy park passes, register to vote and more, much like the recently created One Stop site for businesses. He is also creating a Site Readiness Fund to help quickly convert properties to meet the needs of prospective employers and expanding the EDGE grant program to support small business.
 
Other items of note include a proposed renewable portfolio standard of using 40% renewable energy by 2035, and planting a million new trees across the state.
 
A reminder that next week will see the budget proposed by the Governor, a starting point for the General Assembly. The Joint Finance Committee will be meeting later this year to write their budget and it remains to be seen what of the Administration’s proposals will make the cut.
 
More on the proposed budget and what it contains next week.

By James DeChene

​There is a fascinating article in the Wall Street Journal Thursday edition that sheds more light on Amazon’s ultimate decision to abandon New York from the corporate headquarters competition to instead build in northern Virginia. Delaware, along with every state and metro area competing for development, can learn a thing or two on how companies react to how they are perceived when making expansion decisions.
 
The crux of the article focuses on Amazon’s “burn book," a Microsoft Word file of all the public statements made by elected officials and other leaders who stood in opposition to the project. Ultimately used as evidence to back up the decision to give up on New York, it highlights the importance that words, public perception, and overall feedback is weighed when making important decisions. In Delaware we pride ourselves on our size, our intimacy, and the ability to gather all the necessary players in the room quickly and easily to successfully woo companies here.
 
That still leaves the other side of the coin to be dealt with, the court of public opinion. When companies are excoriated to “pay their fair share” (whatever that means), are accused of not being good corporate citizens for not blindly acquiescing to the latest trend that hits a company’s bottom line, and made to feel like nothing more than an ATM machine dispensing directly into state coffers, that’s where problems rise.
 
In the next year I expect a number of debates happening in this court of public opinion where these claims will be thrown about. From finding ways to deal with the cost of healthcare and how employee coverage is paid for, to new forays into labor law that will ultimately cost companies time, effort and resources to adjust to, to continued calls for increases in gross receipts taxes, licensing fees and other revenue generators, the perception of the business community will increasingly be under scrutiny.
 
Delaware’s size is certainly an important asset in attracting companies here, and without annexing land on the Delmarva Peninsula, its size will stay the same. What needs changing is how businesses are viewed and recognizing their positive impacts on Delaware’s economy and long term success, and taking measures to make sure they remain successful and grow. Without that, we may as well put up “I Love NY” signs at our borders.