Earlier this fall, the Delaware State Chamber of Commerce membership participated in a survey on their view of Delaware’s economy, key issues, and polices impacting business growth. The survey results will play a key role in the Chamber’s 2018 issue and advocacy strategy, including a continued focus on creating a successful environment for small businesses. We are listening to you as we build our advocacy agenda for 2018, which will include your top policy priorities:
As we build on the successes of 2017, your continued engagement is vital to advancing a prosperous business climate and attracting new enterprises to the state.
A special thank you to members who took the survey.
Please take a few minutes to review the survey results by clicking here.
November 1 began open enrollment for the Health Insurance Marketplace. Whether you’re uninsured and looking to find coverage, or would like to explore the available options, you can use the Marketplace to find coverage that works for you. The open enrollment period is shorter this year than in the past and the final deadline for enrollment is December 15th. Don’t miss your chance to get covered!
During the open enrollment period, you can visit www.HealthCare.gov to create an account and find coverage that works with your budget and meets your needs. You can also see what financial help you may qualify for. If you have Marketplace coverage currently, you have the opportunity to review your application to ensure it’s up to date and report any life changes.
Quality coverage is more affordable than you may think. Last year, 8 in 10 people qualified for financial help – for most people, that meant they could find premiums from $50 to $100 a month. The Marketplace and expansion of the Medicaid program helped cut the U.S. uninsured rate down to a historic 8.8 percent. We can continue this progress by getting even more Americans covered, which also helps lower health coverage costs.
There is no need to worry about paying for sudden medical emergencies. Find a policy that brings you and your family peace of mind, and will provide no-cost preventative care. Before the Marketplace, high medical bills were the leading cause of personal bankruptcies. Now, you can be prepared for routine, preventative, and unexpected medical costs.
If you have any questions about signing up, or want to talk to a trained Marketplace navigator, free help is just a call or click away. To apply and enroll quickly online, visit www.HealthCare.gov, or call the Marketplace call center 24 hours a day, 7 days a week at 1-800-318-2596. A representative will be able to assist you in the enrollment process as well as to answer any questions you may have. There are also trained representatives you can speak with in person if you have questions.
Visit www.Localhelp.HealthCare.gov to find a representative near you.
Congresswoman Lisa Blunt Rochester
by James DeChene
In Matthew Albright’s recent op-ed for the News Journal, which was well written and with which I largely agree, he made the argument that it’s time for Delaware to answer the question of how much government it is willing to have its citizens pay for. Albright’s article echoes a sentiment I’ve made with elected officials—there needs to be an audit of what government should be, what services it wants to provide, and then, how to pay for them.
Delaware has done an excellent job of outsourcing its tax and revenue liability onto entities outside the state. From the $1.1 billion it collects from the Corporate Franchise Tax, $400 million in escheat, and about $100 million combined from the Corporate Income Tax and Bank Franchise Tax, that represents an easy-to-calculate roughly 40% of the state’s annual budget. That number doesn’t take into account tourism, other items visitors cross the border for – tax free shopping and low(ish)-taxed cigarettes – or tolls on I-95 and RT1, which pushes our percentage even higher.
As Albright outlines in his article, Delaware is one of the top five per capita spenders on government, based on studies from the Brookings Institution and the Kaiser Family Fund. This fact, in spite of Delaware having one of the lowest tax liabilities in the country, has allowed state spending to rise without its citizens feeling the pain. Or so the story goes. The business community, however, has seen its share of costs mount each year, from double digit increases in health care costs, increases in the costs of doing business from additional regulatory burdens imposed by the state, as well as increases in other operating costs such as utilities.
The answer to the question of whether an increase in taxes is necessary to cover increases in state government is, in our view, going after the solution the wrong way. Focusing first on what Delaware’s government should look like, and on making government more efficient, should be the answer. Simply saying more money is needed, without combined efforts to eliminate duplicate or wasteful spending is a recipe for the continued trend of businesses relocating, and residents moving across state lines.
by James DeChene
As widely reported, the FY2018 budget passed with a mix of new revenue and a number of expenditure cuts and other reductions. The ratio was about 48% new revenue ($182.7 million) and 52% cuts ($195.1 million), roughly meeting Governor Carney’s goal of a 50-50 split to fill a budget gap of $377.8 million.
The new revenues are fairly easy to account for: increasing the corporate franchise tax ($116.1 million), raising the alcohol excise tax ($5.2 million), raising the tax on tobacco products ($11.9 million), and raising the realty transfer tax ($45.6 million), changes to insurance policy charges ($4.6 million) and one-time special funds ($3 million).
Tax cuts, and reductions of proposed increases, came from, among other things:
Simply put, nothing contained in the revenue package is designed to be a fix for Delaware’s structural issues, and the list of funding issues the state faced this year only increase next year, including:
The Delaware State Chamber of Commerce believes in the time available between now and the end of 2017 should be focused on discussions and planning on how to address these issues in the next part of legislative session. Waiting to solve budget crises with a complicated series of steps, such as the removal of itemized deductions, or looking for new, last minute, sources of revenue makes for ill-formed policy. The ability to have in-depth discussions regarding the impacts of tax increases and spending cuts will go a long way to helping set Delaware on a path to prosperity.
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.
by Mark DiMaio
In 2000, Delaware had a 65+ population of 103,000 and by 2015, the 65+ population had grown by 56,000 to 159,000 people. During the same time period, the state’s health care employment had grown from the third largest employment sector (40,000) to the largest sector with 70,000 jobs. The growth of health care employment is keeping pace with not only our 65+ population growth, but with the state’s overall population growth. Delaware’s growing aging population is likely to spur continued growth in the health care job sector. Over the past 15 years, Delaware's finance job sector has hovered around 48,000 jobs, but our manufacturing sector has decreased by 12,000 to 28,000 jobs. Delaware’s manufacturing job sector 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. It’s wonderful that our health care job sector continues to grow, but Delaware needs to keep a diverse employment environment, and manufacturing jobs need to play a key role.
A study by Ed Ratledge, Director of the Center for Applied Demography & Survey Research at the University of Delaware, points out that Delaware’s General fund expenditures will outpace the state’s revenue collection, and forecasts a gap to continue beyond 2020. While Delaware’s employment picture has greatly improved since 2008, manufacturing jobs have been slow to return. Growth in the manufacturing sector is critical to a prosperous Delaware. Manufacturing employment can create not only well-paying jobs, but drive employment in the job sectors that service those businesses. The Delaware State Chamber of Commerce is committed to working with stakeholders to revitalize Delaware’s manufacturing sector and drive economic growth. Diversified economic growth is essential to building a thriving Delaware economy.
by Mark DiMaio
On Wednesday, March 8, the State Chamber’s Board of Governors was honored to have Mr. Ed Ratledge, Director of the Center for Applied Demography & Survey Research at the University of Delaware, as their guest speaker. Mr. Ratledge has more than thirty years of experience and expertise providing policy and survey research for federal, state and local government agencies and non-profit organizations. His presentation focused on Delaware’s economic and demographic trends projected for the next thirty years. Mr. Ratledge’s research shows that number of Delaware households will increase to over 400,000 by 2030, but will level off until 2050. Additionally, the research shows that by 2050 the state’s 65+ population will increase from 158,999 (2015) to an estimated 263,532. However, Delaware’s 0-19 population will remain relatively stagnant over the next 35 years, averaging 232,900 per year until 2050.
Mr. Ratledge’s research also showed that Delaware’s general fund expenditures will grow faster than projected revenues at present, and continue to do so beyond 2020. While the state’s pension and debt service expenditures have gradually increased from FY12 to FY17, active and retired employee healthcare expenditures have accelerated significantly from FY15 to FY17. Chamber President Rich Heffron believes Mr. Ratledge’s analysis of our aging population and expenditures should give everyone pause.
“Ed Ratledge’s research is very sobering and reinforces Governor Markell’s 2016 State Financial Overview (presented on 1/28/2016, slide 16) that forecasts a $484 million dollar deficit in the state’s group health insurance plan for employees and retirees by 2022, if employee contributions remain the same. Ed does a great job of laying out the facts and we look forward to working with stakeholders to find sound solutions to the state’s budget issues,” said Rich Heffron.
Mr. Ratledge's research will kick off a 3-week series in the Chamber’s Weekly Report email that will further explore some of his data.
by Chip Rossi
DSCC Chairman of the Board
The Delaware State Chamber of Commerce Board of Governors met with the candidates for the special election in Senate District 10. Both candidates shared their thoughts on how to turn Delaware’s economy around and improve education. Each acknowledged that Delaware’s economy and budget should be the primary focus of the Delaware General Assembly and the Governor – and need to be addressed.
After the presentations, the Chamber’s Board of Directors discussed if the Chamber should endorse a candidate. Both candidates presented well and focused their remarks on many of the things the Chamber advocates for every day, including the growth of small business, infrastructure, good jobs and safe, healthy communities throughout the state of Delaware.
Our focus quickly shifted from the candidates themselves to what this election means long-term for Delaware.
The spirited discussion that followed highlighted the importance of a change election if Delaware is to improve its political and economic standing. We find ourselves, year after year, facing budget deficits that underscore a fundamentally broken system and legislative remedies that are too often short-sighted. Given the urgency of the moment, the questions raised by the Board included:
For all the reasons stated above, this district election has statewide impacts. The answers to these questions, and others, are critical if Delaware is going to succeed as a place where businesses want to relocate or expand, where families want to raise their children, and where those children don’t have to leave our state to find gainful employment.
On February 25th, the voters in the 10th Senate District have an opportunity to consider these questions and determine the path forward.
Read coverage of this piece in The News Journal here.
by James DeChene
A reminder for residents of the 10th Senate District, as if you needed one with all the mailers, ads, door knockers and other campaign activities blanketing the area, that the special election is Saturday, February 25th.
The Chamber’s Board of Directors message on what we feel voters should focus on can be best summed up as:
by James DeChene
In the last week, I’ve heard two presentations from the Office of Management and Budget on how they’re starting to put together next year’s budget, the November public hearing schedule (they start on November 22nd, and can be found here), and how DEFAC’s forecasting will be critical at their December meeting.
To date, DEFAC has estimated a $167 million revenue shortfall for FY2017. What remains to be seen this fall are how “door openers” will impact that number. Door openers include the final student enrollment numbers public schools report to the state, the final Medicaid numbers and, this year, the prorated raise amount for state employees. The best guesstimate on these additional increases are in the $150 million range, meaning budget writers need to find between $300 and $400 million in order to meet budget.
Shifting to how the state spends its money – 73% of the FY2016 budget is allocated to employee salaries and health care, pensions, Medicaid and debt service. Without cuts to personnel or programs, these numbers will increase next year. The largest growth of public sector employees are in education, as student enrollment in public schools continues to rise as more kids are transitioned from private/parochial schools back to public (1,500 students are added on average per year). Over 228,000 are eligible for Medicaid (over 25% of Delaware’s population). Revenue growth in FY17 is expected to be 1.5%, and FY18 will see 0% growth as currently forecast.
These are all items the State Chamber has talked about for the last few years—specifically on the need for there to be structural changes to how the state collects and spends money. Many of these ideas were highlighted in the Delaware Business Roundtable’s Growth Agenda, and we support their immediate adoption. This next year will be another difficult money year, with no easy solutions, but the business community, including the State Chamber, has proposed ideas on how to invest in economic development, make Delaware more attractive to outside entities, and to help turn our economy around. We hope the 149th General Assembly will discuss and debate these issues recognizing that without action, our budget will continue to suffer.