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:
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.
Between now and January 2021, when the 151st General Assembly convenes, much will have happened:
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.
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
This week Governor Carney released his 2021 Recommended Budget. Some items were already covered in his State of the State, including a $50 million investment in clean water, and $50 million to build a new school in Wilmington and upgrade existing city schools.
The Governor also reiterated his commitment to holding budget growth with an eye on the future by keeping growth below the DEFAC benchmark (under 4% for this year). While our economy is currently strong, the budget continues to set aside money for the future ($161 million in total—just under $40 million this year) and using one-time money for one-time projects. The bond bill appropriation is the highest ever, with over $892 million allocated to capital improvements.
Other items include:
• $180+ million in school construction/deferred maintenance around the state
• $20 million to the strategic fund
• $10 million transportation infrastructure fund, which the Chamber supported enabling this legislation
• $10 million to graduation lab space for innovators at UD/Experimental Station to move into as they grow from start-ups to needing lab space
• $10 million site readiness, which is based on Chamber-backed “Ready in 6” permitting reform provisions
Also this week were a pair of bills sponsored by Rep. Baumbach, and he’s batting .500 as far as State Chamber support goes. The first, HS1 for HB80 modifies his Earned Income Tax Credit legislation the Chamber has supported in the past as a way to provide low-wage earners a refundable tax credit. This approach has proven to put money in the pockets of workers, without the associated job losses of a minimum wage increase. The bill has been released from committee and now awaits a House vote. The Governor has indicated he is inclined to sign the bill if passed.
The other bill, HB288, would enter Delaware into a multi-state compact wherein Delaware would be precluded from offering incentives to attract businesses to Delaware currently located in a compact state. This puts Delaware at a direct disadvantage with surrounding states, and municipalities such as NYC that will continue to be able to utilize incentives to attract businesses to their locations.
The General Assembly will be off for the next 5 weeks as the Joint Finance Committee and Bond Committee meet to start marking up the 2021 budget.
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 was the first in the four-week sprint to June 30. Highlights this week included: HB110, the legalization of marijuana bill was released out of House Revenue and Finance committee. DSCC remains opposed to the bill for reasons such as restrictions in how employers can create employment policies surrounding marijuana use, the current difficulty for employers finding qualified applicants that can pass a drug screen (which we think will be exacerbated by legalization) and the lack of a spot test for impairment.
SB105, the bill that would raise Delaware’s minimum wage to $11 in January 2020 and then by a dollar each year until it hits $15 in 2024 (with an imbedded escalator to raise with cost of living), was tabled in committee this week, HOWEVER, it will be heard in Senate Labor Committee next Wednesday, June 12. This will be one of the Key Votes (along with HB110) that DSCC will be using when making the decision on whether to support candidates.
Also this week was the State Chamber’s End-of-Session Brunch. Attendees heard from Tim Holly, chair of the DSCC Employer Advocacy Committee, on HB110, from Gary Stockbridge, DSCC Chairman, Chair of the Delaware Workforce Development Board (DWDB) and President of Delmarva Power, on what the DWDB is up to and how members can help in workforce training. We then heard from Solomon Adote from the Delaware Department on Technology & Information on the Cyber Security Council and the work they are doing to develop best practices on how to combat cybersecurity threats.
Rounding out the morning were remarks from House Speaker Pete Schwartzkopf on what to expect in June, including legislation on clean water, medical and recreational marijuana, education investments and how the state budget is shaping up. Senate President David McBride offered his perspective including acknowledging efforts by the General Assembly and the State Chamber to help provide economic development opportunities in Delaware. He also discussed what the Senate will be working on, including minimum wage in committee, education and transportation infrastructure investment
by James DeChene
This week was the first of the Memorial Day break, and the first of the Joint Finance Committee working on marking up the FY20 budget. Good news for budget writers came in the form of DEFAC numbers on Monday, adding close to $80 million to the forecast. Split almost evenly between the current year ($40.7 million) and next year ($38 million), this meeting continued the trend of meetings since September where an average of $40 million to the current year was brought in. This month the largest increase came from personal income tax filings. The total increases for FY19 total $200 million and nets out to an additional $160 to spend, or as the Chamber advocates, to set a large portion aside for when the economy takes a downturn.
That message was the focus of a letter sent to the members of Joint Finance this week from Chamber president Mike Quaranta that setting aside these dollars is good stewardship of public dollars. As a large part of Delaware’s revenue stream does not move with the economy, it’s important to save now while the money is coming in.
More good news in that Delaware’s unemployment rate is the lowest since 1988, and we haven’t suffered the national numbers where the unemployment numbers are down, but so is workforce participation. A good win-win for Delaware.
And lastly, the best news of all this week, is the three-day weekend. Memorial Day, BBQs and vacation aside, is the time when we should reflect on those who gave their lives for the lifestyle we currently enjoy. The freedoms we have today certainly weren’t free to achieve, and the thousands of men and women who made the ultimate sacrifice deserve recognition in how they helped shape this great country of ours.
by James DeChene
This week kicked off the first round of Joint Finance Committee Hearings. Meeting throughout February, JFC members will hear from each state government agency on what their budget needs are for the next year and what and how the programs they provide are faring. Of note this year is the Governor’s Recommended Budget setting aside 2% of revenues to be used in times of economic downturn. That roughly $90 million is added to $45 million that was set aside last year. This means there is a $135 million pot of money that will be carried forward into next year’s budget, given legislators follow the budget plan. The problem will be if legislators choose to ignore the Governor and invest that money in long-term programs requiring ongoing revenues to sustain them. The State Chamber has been bullish on supporting efforts of budget stabilization and remains committed to that effort.
Also of note this week was a CNBC article on jobs at risk of automation. According to the article, automation will impact 25% of the US working population and many of the jobs that are either entry level, or slightly above, including cashiers, customer service representatives, and even commercial truck drivers. You can read Mike's President's Message for more on that and a link to the article. What this means functionally for policy makers is that focusing on legislative items like raising the minimum wage or creating other barriers to employment will only serve to hasten the demise of these jobs. Kiosks and other self-service centers will be adopted more quickly, leaving behind a displaced workforce lacking the training or skills necessary to move on to their next jobs. Instead, focus should be on providing skills training to targeted industries, so instead of being a cashier, a person can be a technician working to maintain and repair the kiosk.
by James DeChene
This week’s focus in Dover was on two bills directed toward the 500 federal workers living in Delaware currently furloughed. The first bill, which passed both the House and Senate, allows these workers to petition the court to halt eviction and/or loss of insurance policies or automobiles due to non-payment for the duration of the federal shutdown and for a duration of 120 days after. It would also limit the amount loan holders could charge during this time period, capped at 6%, no matter the original loan terms. The second bill, which passed the House, but failed in the Senate, would provide furloughed workers the opportunity to apply for state backed, low interest loans.
Also this week the Governor announced his recommended budget. Of note to Chamber members was the outlining of how a newly created infrastructure fund ($10 million dollars) would be managed, allocating $15 million to colleges and universities toward economic development initiatives; adding $7 million additional funding in the Bond bill to UD, DSU and DelTech, allocated for deferred maintenance; and setting aside $12.5 million to Delaware’s Strategic Fund.
The General Assembly will be in recess throughout February as the Joint Finance Committee will meet to hold budget markup sessions. They will return March 5.