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  • Withdrawn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.

by James DeChene

Last week had, and in the upcoming magazine will have, a write up on the end of session that wrapped up early July 1st. Not captured, however, were some of the more esoteric moments that helped make up the last six months that I’ve found interesting now that summer has officially begun and your friendly neighborhood government affairs professional has time to think.

Headed into January with over 20% new faces was both exciting, thrilling, nerve-wracking and (at least for me) a career first to work with so many new members. It’s been interesting watching them learn the ways of the building, finding out what issues they are passionate about, and how the State Chamber and our members fit in. The answer to the last point is a positive one from my perspective. Each of the freshman legislators I had the opportunity to work with were open to hearing how legislation would impact the business community, and while we may not have agreed after each conversation, it’s important to continue to build the dialogue and relationship going forward.

I was also impressed with the “temperature” of the building. It’s no secret the last few years ended in with tempers flaring as the time grew later and later into July 1st, and even beyond. This year (with hopes that next year will be similar) each Chamber was efficient in finishing up what they needed to do, and it was one of the earliest, and least contentious, endings to a session in recent memory. Let’s keep that particular streak going.

As I think back to the work that was accomplished in the last six months, I’m grateful for the partnerships that helped make it possible. The Association of Chambers has been the most active it’s been in years with almost every chamber of commerce actively participating. The State Chamber membership stepped up to help provide background, talking points, suggestions, communications and alternatives on key pieces of legislation this year. That streak will definitely need to keep going.

You’ll hear more from us in the coming months on priorities we’re pursuing, including cheaper health care options for businesses, innovative ideas on workforce development and training opportunities, as well as asks for help to keep up the pressure on the “old standbys” in minimum wage and marijuana legalization legislation. You’ll also be asked to provide your feedback on these and other issues as we shape our 2020 agenda. Until then, I hope you enjoy this bit of summer and that your AC continues to work.

Earlier this morning the General Assembly finished their work for the first leg of this legislative session. Items of note included a budget that set aside close to $125 million in reserves for future years, the largest bond bill in Delaware history, and a grant-in-aid bill with more money allocated than in recent years.
 
Of specific note for the business community are the bills that did not find their way to passage, although many will return in January. They include a minimum wage increase, a tipped worker minimum wage increase, and the legalization of recreational marijuana.
 
The Chamber continues work on a number of items into next year, including finding creative ways to lower health care premiums for small and medium sized businesses, investments in workforce development and training opportunities for unemployed and underemployed workers, and finding innovative ways to attract and retain high level talent for employers looking to expand and relocate here in Delaware.

The State Chamber thanks you for your engagement this legislative session and we look forward to working with you next year in making sure Delaware is the best place to live, work and do business.

by James DeChene

This week, the last of this session saw a few bills of importance to the business community being either introduced or worked. One is SB 71, a bill that would mandate that all future pharmacies run in Delaware be owned and operated by a pharmacist or an entity comprised of a majority of pharmacists. This would have serious impacts on the pharmacy, developer and construction industries in Delaware, as chain pharmacies, grocery stores and stores like Walmart and Target would no longer be able to run their pharmacies themselves, and would instead have to lease out space to pharmacists/pharmacist groups if they wanted one in their store. This would have a chilling effect on future development and expansion of these entities in Delaware, including potentially putting the kibosh on the proposed Wegmans in Barley Mill. The State Chamber and others have asked for the bill to be delayed until next year so that we can work toward a compromise. More to come.
 
Two bills involving tipped workers and minimum wage were introduced this week. One would raise the tipped worker minimum wage to 65% of the current minimum wage, and the other would govern how tips are reported and paid out by an employer. The State Chamber is currently reviewing these bills with industry organizations and representatives to judge their impact.
 
​The Senate passed the Bond bill late Thursday night, totalling $816MM for FY19 and $862.9MM for FY20, where it now faces a vote in the House.

The General Assembly will meet on Sunday and into Monday as they finalize the last minute spending bills (bond and grant in aid) and work to get their last minute must-haves passed. Look for an update Monday on the big ticket items accomplished.

by James DeChene

This week in Dover saw the General Assembly continuing their work prior to the June 30th recess. Items of note included confirmation that the minimum wage bill will not be worked on again until January, and the same for the legalization of marijuana. The State Chamber will continue to advocate on behalf of the business community educating members of the General Assembly of the pitfalls of these bills, and will be looking to our members to help share their stories.

The House passed the budget bill this week, along with an approximate $61 million one-time spending bill to be administered by the Office of Management and Budget. Once bond and grants in aid bills are finalized, that will dictate how much will be used in the set aside for reserves (a reminder that the State Chamber has called for $125 million to be set aside). A bill that would allow school districts to provide students with bus passes, allowing them to get to school and potentially to after school jobs, passed the Senate where it now heads to the House. A bill that would increase the penalties for failure to file their proof of unemployment insurance each quarter from $17.25 to a minimum of $100 with a cap of $450.

Next week is the final week of session, ending June 30/July 1. Items to be considered, along with finalizing the budget, will be bond bill, grants in aid, and perhaps the workplace fraud act legislation that the Chamber and others have been working on for about a year now. More to come.

by James DeChene

This week in Dover the major bill impacting the business community was SB105, which will raise Delaware’s minimum wage to $15. We started off the week hosting a teletown hall with over 50 members joining to hear the latest on timing and strategies, and a number of businesses joined us in Dover to make comment on the bill at the Senate Labor Committee. The stories business leaders shared during the committee meeting were compelling and varied, and included entities ranging from nonprofits to small and medium sized businesses from bakeries to a small business sign maker. Ultimately the bill was released from committee and has now been assigned to Senate Finance Committee due the bill’s significant fiscal note. If you have not taken the opportunity to contact your senator on this bill, I urge you to do so by visiting our Action Network page. 
 
Other bills of note: The passage of a Chamber-backed bill in SB61, which would create a Transportation Infrastructure Investment Fund (TIFF) to help expedite commercial and industrial development projects. Released out of committee was SB74. This bill would make a technical change to the New Economy Jobs credit making it easier and more likely businesses will be able to take advantage of the credit.
 
Moving forward, there are 7(!) legislative days left this session. DEFAC will meet next Wednesday to announce the final forecast numbers that will dictate how much money will be allocated to the bond and grant-in-aid bills.