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.
Good news this week from Milford and Smyrna as the Delaware State News highlighted a number of development projects stemming from the Downtown Development Program. The five-year-old program was designed spur economic development in targeted downtowns throughout Delaware in need of revitalization. Of particular note the article stated, “The 12 projects announced Thursday, with nine taking place in Wilmington, received $5.5 million in rebates leveraging $103 million in total investment.”
Also this week, the National Lieutenant Governors Association was in town, hosted by Lt. Governor Bethany Hall Long. The meeting featured a number of topics that related to Delaware—how states have successfully leveraged FEMA in disaster relief, innovative ways to address the ongoing opioid crisis, how states are working with private employers and associations to address the jobs needs across the country (it’s estimated there are 7.3 million jobs currently available—more than the available unemployed workforce), and how criminal justice reform is helping bring ex-offenders into the workforce and stemming recidivism.
In the coming weeks the Council of State Governments and the National Council of State Legislatures will be meeting, and I hope to get feedback from local attendees on any trending policy initiatives that could Delaware could see next year. Stay tuned.
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 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.
members testifying against sb105 on june 12:
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
HB110, the bill that would legalize recreational marijuana, will be heard in the House Revenue and Finance Committee on Wednesday, June 5, at 2:30 p.m. Those members who have concerns over what legalized marijuana will mean to their business and their employees should come to Dover and tell committee members about the impact this legislation will have if passed.
To recap, the bill:
Each speaker can expect to have two minutes to speak—including introducing themselves and their organization, the number of employees you have, and the impacts the bill will have. I am happy to help guide you through this process. Please let me know as soon as possible if you plan to attend.
In other news this week, DTI and Bloosurf announced a partnership to bring broadband to areas in Sussex, Kent and southern New Castle counties over the next 18-24 months. This is an initiative the Chamber has been very supportive of, and we are looking forward to the economic development opportunities that will come as a result of this investment.
The General Assembly is back in session next week, and 13 legislative days remain. Expect a flurry of bills to be introduced, including a clean water infrastructure bill and more to come on a potential minimum wage increase bill.
by James DeChene
Legislative Rosters! Rosters are here! For those interested in purchasing, please email Linda Walsh at firstname.lastname@example.org.
This week a bill raising the purchase age of tobacco products passed the Senate, and now goes to the House to be heard in committee.
The Chamber is in the process of reviewing the 19 criminal justice reform bills announced last week and the impact they may have on employers. More info to come.
Next week we expect the Youth and Training Wage repeal bill to be heard in the House Economic Development, Business and Insurance committee on Wednesday at 2:30. If this bill impacts your business, please make plans to attend and comment. For more information on the bill, you can email me at email@example.com.
by James DeChene
This week in Dover saw the announcement of a 19 bill criminal justice reform package highlighted at a press conference Thursday. While the vast majority of these bills have yet to be introduced, we know several are designed to help those with arrests or records navigate an easier path to employment. One bill involves mandatory expungements for single misdemeanor offenses and for arrests with no conviction if no further offense takes place for 5 years. Another eases licensing requirements for electrical, HVAC and certain other professions requiring professional licensure. The Chamber has been supportive of those efforts in the past, and awaits review of the current language.
It was a light week on the Senate side, as much of their business was put on hold due to a significant number of members out sick. We hope they feel better soon are able to make it back to Leg Hall for work.
In the House, the National Popular Vote interstate compact passed and now is headed to the Governor for signature. The bill would change how Delaware awards its Electoral College delegates during a Presidential election. Current policy awards Delaware’s three votes to the winner of the popular vote in Delaware. The new proposal would award Delaware’s three votes to the winner of the national popular vote. This process would change once enough states (representing at least 270 electoral votes) agree to participate.
Next week we expect the Tobacco to 21 bill (raising the age to purchase tobacco and e-cigarette products to 21) in the Senate. Also, we expect HB47, the bill to revoke the youth and training wage rates related to minimum wage, to be heard in the House Economic Development next Wednesday at 2:30 p.m. If your company would be impacted by this change, I urge you to come and make comment during the hearing to let legislators know how this would impact your business.
by James DeChene
I’m still amazed at how Amazon decided to pack its virtual bags and abandon plans to build a headquarters in NYC. Not only does it showcase the hoops that businesses go through to relocate and bring jobs and development to a city or region, it’s staggering when you compare cost of living to other areas across the country.
Case in point comes from a WSJ opinion article (PDF version here) from a restauranteur who moved his business from California to Nashville. Comparing cost of living in Arlington (the site of the headquarters building Amazon will build) to NYC to Nashville shows that compared to living in Manhattan, a $150,000 salary there translates into a 51.8% increase in purchasing power in Arlington ($229K) and a whopping 171% increase in purchasing power in Tennessee, to the tune of almost $410,000.
All of this circles back to places like Delaware. We have a ton going for us—low cost of living, urban, suburban, rural and beach lifestyle choices, regionally located to all the places you want to visit but may not want to live, and access to a talented workforce that’s getting better by the day.
The story also reinforces messages that the State Chamber and other groups have been offering for years related to permits and places like Middletown that get that timing matters. As we’ve heard from site selectors, 6 months for permitting is the sweet spot to get noticed by companies looking to relocate. Efforts continue to track permit status, made easier by DELDOT and DNREC websites created to do just that, but more can and will be done to perfect the process.
Companies, and their C-suites, should be looking at what happened in NYC with Amazon, and should be making decisions based on how they’ll be received by local communities. The fact remains that Delaware is a bargain, and by continuing to make strides in making us more attractive, we’re in a better position to compete.
by James DeChene
This year’s “Rich States, Poor States” was released this week, and Delaware checks in at 28th for economic performance, and 36th for economic outlook. Performance is calculated by considering state GDP, non-ag employment numbers and domestic migration. No surprise that we come in high (19th) in migration as we are a retirement destination state due to low property taxes and great beaches. For economic outlook, there are 15 areas considered, some in which we score well—no sales tax, low property tax; and some not so well—marginal tax rates on both individual and corporate payers, and average workers compensation costs. These numbers are right around where we were last year: 37th in 2017 and 44th in 2016, but 27th in 2014.
In the broader picture, an interesting take away was how net migration will impact congressional seats in the 2020 census. According to Election Data Services, the following states are poised to gain seats:
· Texas will gain three, from 36 to 39;
· Florida will gain two, from 27 to 29;
· Arizona will gain one, from nine to 10;
· Colorado will gain one, from seven to eight;
· Montana will gain one, from at-large to two;
· North Carolina will gain one, from 13 to 14; and
· Oregon will gain one, from five to six.
These states are poised to lose seats:
· New York will lose two, from 27 to 25;
· Alabama will lose one, from seven to six;
· California will lose one or remain even, from 53 to 52 or no change;
· Michigan will lose one, from 14 to 13;
· Minnesota will lose one or remain even, from eight to seven or no change;
· Ohio will lose one, from 16 to 15;
· Pennsylvania will lose one, from 18 to 17;
· Rhode Island will lose one, from two to one; and
· West Virginia will lose one, from three to two.
The “Rich States, Poor States” report lays out these numbers as well, and ties in states' overall tax policy approaches to help explain the migration. If the trend continues, high tax states will continue to lose congressional seats. It will be interesting to see how that changes the makeup on Congress, and their approach to tax policy.