by Mark DiMaio

Delaware’s Medicaid enrollment continues to rise. Since 1999, Medicaid enrollment has grown from just under 100,000 to over 230,000. The growth has put a tremendous strain on Delaware’s budget. To combat Medicaid’s growth, it’s imperative that new jobs are created in Delaware. While some job sectors have grown, or at least stabilized, over the last 15 years, Delaware’s manufacturing sector has decreased by 12,000 jobs to 28,000. The decline mirrors much of what has taken place nationally, but over the past six years, Delaware’s manufacturing sector decline has slightly outpaced the national trend. Manufacturing employment can create not only well-paying jobs, but drive employment in the job sectors that service those businesses. Taking steps, like modernizing the Coastal Zone Act (CZA) could attract new business and jobs to Delaware. The State Chamber is working with stakeholders to modernize the CZA and enhance Delaware’s manufacturing climate.

Medicaid spending isn’t the only state expenditure growing at a significant clip. In former Governor Markell’s final State of the State address, he points out that the current spending on state employee health care isn't sustainable. According to Governor Markell, Delaware’s cost estimates, with no increase in state or employee retiree contributions, would result in the state facing a deficit of $484 million by 2022. The continued growth in Medicaid spending, combined with a steep increase in employee health care costs, presents Delaware with a substantial problem. More jobs, especially manufacturing jobs, should help decrease the state’s Medicaid population. Bending the cost curve for state employee health care expenditures will require more than negotiations with service provides. Some measure of additional state employee contributions needs to be considered. An increased share of employee health care contributions is already a reality for most Delawareans.

​​A message from the DSCC Chairman of the Board, Chip Rossi

Click here to read this message in the September/October issue of Delaware Business magazine!
The most important role of any chamber of commerce is to help its members succeed. Earlier this year, we asked all of you what you wanted from your state chamber of commerce. While most of your responses aligned to topics that we are working on today, we learned a few things that are helping us better serve you in the future.

You told us that the most important area of support is the role that we play advocating for legislation on key issues. Whether discussing the commercial impacts of the Coastal Zone Act or encouraging legislation that provides greater access to capital for  small business owners, we strive to be a consistent voice at the legislative table. These discussions, and others like it, ensure that the interests of our members are represented in the legislative debates that affect how Delaware does business.

You also asked us to continue to work with the state to find new ways to drive sustainable revenue growth in Delaware. The budget shortfall  continues to widen as the Delaware Economic and Financial Advisory Council (DEFAC) reduces revenue projections faster than the state assembly can identify ways to reduce spending. This is an  opportunity for us, as business advocates, to continue to encourage state and local leaders to tackle the difficult decisions that need to be made today to continue to attract and retain businesses  across the state.

Finally, you told us that you appreciate and enjoy the networking and learning opportunities that we offer. To build on that, this year we hosted multiple meetings with key elected officials to discuss legislation affecting small businesses and ideas for improving the Delaware economic climate. In addition, we created the inaugural John H. Taylor Jr. Education Leadership award that was presented to Jack Varsalona, president of Wilmington University, during our 2016 Superstars in Education ceremony in May.

It is important to remember that this work takes  time. We may not see the results we want from every legislative session or key vote, but we remain committed to working on the things that will help our state – and our members – thrive and grow. On behalf of the board and the staff, thank you for the opportunity to continue to work on the issues that you have told us are important to you.


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By Robert Perkins
Executive Director, Delaware Business Roundtable

PerkinsDelaware must fundamentally change its approach to economic development and nurture a growing entrepreneurship base in the face of intense competition for jobs, investment and talent, according to a framework commissioned by the Delaware Business Roundtable released on Wednesday.

The Delaware Growth Agenda provides the private sector’s strategic framework for pursuing a new long-term approach to economic development in the state, including public policy recommendations centered on three strategic goals to be implemented over the next five years.

“The vision of the Delaware Growth Agenda is that our state will focus its efforts on becoming a global magnet for leading-edge technologies, talent and investment,” said Mark Turner, chairman of the Delaware Business Roundtable and president and CEO of WSFS Financial Corporation. “This framework puts forth clear-eyed, achievable strategic goals and strategies that can accelerate Delaware’s economic engine – but only if the public and private sectors work together to make that vision a reality.”

The non-partisan, forward-looking framework is based on interviews and guidance from more than 100 Delawareans, including representatives from economic development organizations, higher education institutions, businesses, government, labor and non-profit organizations. The framework envisions an even stronger and more robust partnership between the public and private sectors to guide future success.

The framework recommends:

Building an entrepreneurship and innovation ecosystem. This includes bolstering federal, state and private investment in higher education, and emphasizing the healthcare, science and technology fields, engineering and entrepreneurship programs. The framework calls for the creation of an “Innovation District” as a destination for entrepreneurs and startups, as well as for marketing Delaware to regional and national angel investors and risk capital networks.

Pursuing a new approach to economic development. The framework calls for establishing a public-private economic development organization, crafting a new comprehensive statewide economic development strategic plan, and a marketing campaign that pursues new investment and jobs in key industries – including financial services, business services, education and knowledge creation, manufacturing, and distribution.

Enhancing Delaware’s business climate. The Growth Agenda says the state must ensure Delaware’s infrastructure meets the needs of a 21st century economy, including updating the Coastal Zone Act to provide greater flexibility in redeveloping brownfield sites. The framework also calls for improving the state’s public education system, taking a leadership role in facilitating more efficient development and permitting processes, and creating a Futures Council of Delaware.

The full recommendations under each of the goals and strategies can be found in the framework, which was developed collaboratively by TIP Strategies and the Delaware Business Roundtable. TIP Strategies is an economic development strategy firm that has worked with states and communities across the country.

In addition to presenting a strategic vision and goals, TIP Strategies also examined Delaware’s economic health over time compared to other states in the region.

Among the findings of the framework:

• Many of the traditional economic pillars of the state – including cars and chemicals – are no longer significant job generators.
• Manufacturing accounted for about 20 percent of the state’s non-farm employment in 1990. By last year, it was just 10 percent of all jobs.
• The state lost more jobs in manufacturing and corporate headquarters than any other sector between 2010 and 2014 – while health care and professional services sectors experienced robust job growth.
• Delaware is home to a growing base on which to build a vibrant entrepreneurship and innovation ecosystem – and higher education must become the long-term driving force behind that ecosystem.
• Delaware’s labor force participation rate between 2010 and 2015 showed the fastest percentage increase among the 50 states.
• In a number of areas, such as private sector earnings growth and gross state product per capita, Delaware’s economic performance is trending negatively when compared to other states.

We are facing real challenges, but the Growth Agenda encourages a reset of economic development in Delaware over the next five years. First and foremost, things cannot continue as they have because Delaware’s existing companies – nor the industry sectors themselves – can be counted on to serve as engines of future growth. We must take a new approach, and the public and private sectors must work together to get it done.

The Roundtable’s intention is for the Delaware Growth Agenda to spark a much-needed discussion of how to expand economic opportunity and jobs throughout the state during the 2016 election cycle that will result in concrete action thereafter. It comes on the heels of the Roundtable’s 2015 study of state finances, which clearly articulated the structural budget challenge facing the state as it wrestles with unsustainable revenue sources and spending patterns and strongly recommended that Delaware focus on expanding economic growth as one part of the solution.

The Delaware Business Roundtable plans to continue to promote sustainable economic expansion and growth in Delaware.

About the Delaware Business Roundtable
The Delaware Business Roundtable is a non-partisan, volunteer consortium of CEOs whose companies collectively employ over 75,000 people in Delaware. Since its inception in 1981, the Roundtable’s broad mission is to enhance the quality of life in Delaware by promoting commerce, job creation and select public policy issues. In recent years, the Roundtable has been a leading supporter of public education transformation and entrepreneurs in Delaware.

About TIP Strategies
TIP Strategies, Inc. (TIP) is a privately held economic development consulting firm, with offices in Austin and Seattle. Established in 1995, TIP is committed to providing quality solutions for public and private sector clients. TIP has completed more than 300 engagements across 38 states and 4 countries. The firm’s primary focus is strategic economic development planning. In addition, TIP has experience with entrepreneurship, target industry analysis, workforce, and redevelopment. The firm’s methods establish a clear vision for economic growth. Community leaders across the country have embraced the TIP model of Talent, Innovation, and Place to achieve successful and sustainable economies.

​by James DeChene

The 148th General Assembly closed out its session in the early hours of July 1st with its mandated legislation, notably the budget, bond bill and grants in aid, finalized.
There were a few notable pieces of legislation important to economic development this year that passed, namely:

• The Delaware Competes Act, which recalculates the way in which corporate income tax is calculated, bringing Delaware in line with other states using a single sales factor formula.
• The Delaware Commitment to Innovation Act, which expands the state’s R&D tax credit, and makes the credit refundable, acting as a draw for companies to keep or move their R&D facilities to Delaware.
• The Crowdfunding bill, which allows Delawareans to invest in startups similar to Kickstarter and other innovative venture capital funding mechanisms.There were also notable bills that would have been detrimental to the business community on which the State Chamber worked to stop including:

• Minimum Wage, a proposed increase over the next 4 years to $10.25 with built in increases for each year after.
• Project Labor Agreements/Craft Training, a bill that would mandate union backed Project Labor Agreements on all state funded construction projects known to add an average of 20-30% to construction projects was tabled. In its place was a bill to mandate apprenticeship training programs on all state funded projects which would freeze out smaller companies, even if the work they do is exemplary.

Budget
In order to provide the bulk of the shortfall funds required in bond and grants in aid specifically, budget writers were forced to raid funds, rely on inversions from unspent accounts and to restrict new program spending to cover, including using the $6 million Governor Markell set aside to help cover redistricting costs associated with the Wilmington Redistricting plan.  The main takeaway from the ending this year was that next year, especially the budget, will be difficult.
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Issues for Next Year:
Economic Development – Coastal Zone Modernization, this year the State Chamber raised awareness of the need to modernize the Coastal Zone Act, specifically for sites located north of the C&D Canal to make Delaware more competitive with surrounding states to create jobs here.  The issue gained no traction in the General Assembly this year, despite a broad coalition of businesses and business groups calling for action.  The State Chamber, along with other coalition members, will continue the process into next year with the hopes of legislation passing.
Budget and Tax Policy – The State Chamber’s Tax Committee is working this summer to help draft recommendations for the next governor to promote pro-growth policy for Delaware.  With DEFAC projecting low revenue growth for the next few years, the time is ripe to review how Delaware collects and spends taxpayer dollars.

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].

​by James DeChene

The Delaware State Chamber of Commerce, along with others in the business community, have urged modernizing the Coastal Zone Act (CZA) in order to spur the next generation of economic growth in Delaware. The focus of modernization has been solely on existing industrial sites sitting abandoned or underutilized where redevelopment of the property is hindered by Delaware specific restrictions created by the Coastal Zone Act.  Recognizing that any effort towards modernization will involve community education that process has begun at the State Chamber and will continue in the coming months.

It may come as a surprise that Delaware has lost over 1000 jobs from companies located in the Coastal Zone in the last few years.  Between the closure of the Evraz steel plant site and reductions at the Edgemoor TiO2 facility Delaware has lost quality jobs proving difficult to replace.  Much of that difficulty stems from Coastal Zone Act regulations that serve as a barrier for companies interested in purchasing and redeveloping property in this state.  One has to look no further than across the state line into Marcus Hook to see how Sunoco’s $2.5 billion expansion is providing quality jobs, yet the 44 acres sited in Delaware have seen no redevelopment, in large part due to the CZA.

With the focus on job growth, what sometimes gets lost in the discussion is what happens if businesses with operations in the Coastal Zone continue to either leave the state or continue to choose not to locate here?  Who is responsible for maintaining containment of mobile contaminations?  What will be the cost to DNREC, DEDO, and Delaware taxpayers for continued involvement in these properties over the long-term?

There exists a case study for these questions in the former Syntech site in Newark.  Between 1981 and 1987, Helix Associates operated a specialty chemicals manufacturing and processing facility which reportedly recovered iodine from waste sulfuric acid solutions. In 1986, an explosion in a 750-gallon reactor vessel destroyed a portion of the manufacturing building and eventually led to closure of the Helix facility. In July 1989, Synthesis Technologies, Inc. (Syntech) began operations by manufacturing specialty batch diazo compounds, including dyes for cloth, color photography, 4 and biological tissue staining until its closing in February 1991. In 1990, a reactor leaked vapors containing heptanes and nitric acid into the outside atmosphere.  As a result of releases of hazardous substances, groundwater has been contaminated.  The site is awaiting redevelopment, but as of now no plans have been filed to do so.

The State of Delaware now owns that site, and others like it, in and around the Coastal Zone, forcing continued investment in environmental monitoring and potential remediation.  The plan is that modernizing the CZA for redevelopment will result in jobs for Delawareans with the additional benefit of reducing the financial impact of monitoring these sites, but we aren’t there yet.
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As the State Chamber has said before, we believe the role of the CZA was not to have industrial sites in the zone wither and die or to handcuff existing facilities by creating barriers that result in limiting expansion or improvement.  It is only through modernizing the Coastal Zone Act in industrial areas to make Delaware more competitive and attractive for redevelopment that jobs and investment will flow.  The alternative, to make no changes to the Act, will insure that there will be an increase in abandoned or underutilized sites resulting in fewer jobs for Delawareans and will cripple the state’s long-term economic growth.

​by Mark DiMaio

The Chamber’s Committees are in full swing, with the Transportation and Infrastructure Committee meeting to discuss the Coastal Zone Act (CZA) and recommendations from the Clean Water Task Force and the proposed DNREC regulations regarding storm water management. The committee continues to discuss the modernization of the CZA and how to best stimulate economic growth in the zone.  The Delaware Clean Water Task Force is looking at a new draft bill related to water fees that focuses on a fixed fee per each Delaware business versus a fee for every business tax parcel. Concerns remain with the recently proposed DNREC storm water regulations. The committee will work with member companies to find a workable solution to the proposed regulations.
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The Chamber’s Economic Development Committee (EDC) held its kick-off meeting last week. The Committee discussion focused on Delaware’s current development climate and ways in which the committee could engage on issues.  Much of the committee dialogue centered on the importance of keeping pace with the rapid economic changes both locally and nationally. The EDC will concentrate its efforts on both short and long-term topics and issues that will best advance Delaware’s existing business climate and foster an innovative environment for future development.  In coordination with other State Chamber Committees, The Delaware Manufacturing Association and the Delaware Public Policy Institute, the EDC will work with stakeholders to advance policies to strengthen Delaware’s economy.

​by James DeChene

For more than 40 years, the Coastal Zone Act has set Delaware apart for companies looking to conduct business on Delaware’s coast. Whether it was meant to eventually force manufacturing and industry to “wither on the vine” or to balance the types of allowable companies with keeping our natural resources pristine, it has created a logjam in the process. Regardless of the intent of the legislation, it is clear that Delaware’s Coastal Zone Act must be modernized in order for Delaware to grow.

There are a number of large economic development projects underway in and around Delaware, including the redevelopment of Sunoco’s Marcus Hook site, of which 40-plus acres are located in Delaware. To date, Sunoco has not indicated any plans for development on that ground, most notably due to conforming to the Coastal Zone Act. The redevelopment of the former Claymont Steel plant is another potentially huge economic development project to bring jobs to Delaware, and hurdles continue to mount for next stage planning.

The world economy has changed significantly since 1971, and the manufacturing world has changed with it. It is readily apparent that manufacturing is not as it once was, and for modern manufacturing plants, whether making cars, medical equipment or other products, the focus is on clean and efficient production. Companies looking for manufacturing and production sites expect the process to be clear, timely, and reasonable, and unfortunately right now that is not a process Delaware can provide.

There is a balance to be reached between protecting the thousands of acres of land within the Coastal Zone that have not seen, and should not see, commercial development and allowing those sites sitting abandoned, underutilized or other properties that have a history of commercial use prior to the Coastal Zone Act enactment in 1971 to be actively, and easily, used. Plans do not, and would not, include refineries or smelting plants as acceptable in the Zone, but instead focus on bringing high tech, efficient manufacturing and other related businesses to Delaware.

Delaware is currently at a crossroads in its history. The fourlegged stool that has been the primary backbone of our economy in recent years—cars, chemicals, chickens and credit cards—has changed dramatically. As our jobs shift away from the chemical industry, Delaware must make itself as attractive as possible in order to bring new business to the state, and modernizing the Coastal Zone Act is a lynchpin to that success. To that end, the State Chamber will begin, and lead, the discussions and debate surrounding how to modernize the Coastal Zone Act. The continued future of economic development in Delaware will be predicated upon the outcome of what will be undoubtedly be a heated debate.
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Our message is, and will remain clear: Delaware cannot afford to have its economic policy dictated by extreme or unreasonable elements of the environmental activist community if there is to be the future successful economic growth this state needs to survive.

​I am honored to have this opportunity to work with all of you, the leaders of Delaware’s business community, as we continue to move our organization forward over the next few years. Mark Stellini did a lot for Delaware during his time as chairman of this organization and together, we can keep that momentum going in the months to come.

Our role at the Chamber is to support businesses of all sizes by advocating on legislative issues like the state budget or the Coastal Zone Act, promoting local leaders through programs like Superstars in Business and Superstars in Education, and helping build important relationships through activities like the Delaware Networking Station. We work together with key leaders throughout the state to drive towards a better, brighter future … a future that offers good jobs, good schools, strong and safe communities, and a diversity of people and ability who together build one Delaware.

This is an important time for our state. Delaware is facing economic, social and political changes and challenges over the next few years that could affect the quality of life for future generations. As we progress through this election year, we must keep in mind that it takes strong leadership to manage through change. I am counting on us to have the courage to tackle the challenges head on.

I know you believe in what we do. I do too.

Together we can create a better Delaware.

Sincerely,
Chip Rossi

​by James DeChene

Chamber Committee meetings have already started in 2016. With the General Assembly set to convene on January 12th, the Chamber’s policy committees are poised for action.  Topics include the Healthcare Committee working to educate employers about the increase in narcotics/heroin addiction in Delaware, reducing the stigma of addiction, what signs to look for in employees and various treatment options available. Look for a spring event panel discussion to learn more. The Tax Committee will be looking at ways in which to help make Delaware more attractive for businesses to relocate to and expand in Delaware, and will be reviewing tax related legislation and regulations as they are drafted to provide feedback. The Transportation and Infrastructure Committee will be looking at the drafted Water Usage Fee bill that was created as the result of a Clean Water Taskforce.  Chamber members have been participants on that taskforce and have provided industry knowledge to help craft the bill. The Employer Advocacy and Education Committee is expected to meet soon to discuss various labor legislation including an expected bill to increase the minimum wage in Delaware to $15 by 2023.  The Environmental Committee will be having their spring event with a speaker TBD, and with potential changes to the Coastal Zone Act this year, they will undoubtedly have feedback to offer as well.
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For more information on how to participate on a committee, contact James DeChene at [email protected].