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.
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by James DeChene
This week Governor Markell addressed the members of the State Chamber’s Economic Development Committee to outline the recent successes focused on economic development, and to discuss how Delaware’s economy is faring as the recovery from the Great Recession continues. Highlighting the importance of workforce readiness and development, the Governor featured the Pathways to Prosperity program currently providing industry developed curriculum to approximately 6,000 Delaware students statewide. This accomplishment comes on the heels of the first cohort of students who graduated this past May with a focus on advanced manufacturing. Their curriculum and required internship hours were provided predominantly by members of the State Chamber and the Delaware Manufacturing Association. The Governor also highlighted successes in retaining the majority of DuPont’s presence in Delaware, while also helping local startups like The Mill, CoIN Loft and 1313 Innovation to bring and foster new and specialized jobs to Delaware. Lastly the Governor focused on job growth in Delaware. Pointing to Department of Labor and Bureau of Labor Statistics figures showing Delaware leading the region in jobs and outperforming the national unemployment level. Governor Markell wanted to be sure that committee members saw these positive trends. Committee Chairman Michael Vanderslice pointed to Administration proposed efforts that the State Chamber and business community had supported, but ultimately weren’t successful. These included having state employees contribute more to their health care plans, increasing the gas tax to fund much needed state infrastructure improvements, and addressing Delaware’s poor water quality. Governor Markell remained optimistic that these efforts would be addressed in future legislation as those issues not only aren’t going away, but must be resolved if Delaware is to be able to continue to meet its budget needs. by James DeChene
Congratulations are due to the winners of primary races in Delaware this past Tuesday. Special congratulations go to Chamber PAC supported candidates House Speaker Pete Schwartzkopf, House Majority Leader Valerie Longhurst, Representative Bryon Short, and Representative David Wilson. Closer to election day, we will be getting you a list of general election candidates, along with a notice of who the Chamber PAC has supported. Next year, as we’ve said before, is shaping up to be an active one from a legislative and regulatory perspective. It bears repeating that the issues important to your businesses—from employment law and health care provisions, to tax policy, to transportation and environmental regulations and all points in between, those you send to Dover will be making decisions that impact you and your employees directly. It is important to vote in November. Of particular note, on Monday, September 19, DEFAC will be meeting to make their forecast on Delaware’s revenue for next year and for projections on what the FY18 budget may look like. This is an important belle weather of how Delaware’s economy is faring, and there have been signs that several key areas of funding may be in jeopardy. Monday will give us a glimpse of how big a fight over the budget we can expect next year, so stay tuned for more. One other item to keep your eyes on is the upcoming change in overtime rules for employees. Following is a link to the most recent guidance on the issue if you haven’t been following it closely: https://www.dol.gov/whd/overtime/final2016/. by James DeChene
On September 20th, from 8-11 at Alfred I. duPont Hospital For Children, the State Chamber and its Health Care Committee, will be holding an event focused on what employers need to know about opioid abuse in the workplace. Separate from medical need, this event will focus on the dramatic increase of abuse and how it impacts a business, what resources are available for employers to help employees and/or their families seek help and what other options are available aside from simply firing an employee. Recently, in Huntington, WV 26 people overdosed in just under 4 hours, cutting across a wide swath of the population with no bias against race or social or economic standing. This epidemic can impact anyone, and it is important to know how best to deal with its impact. The event speakers will be: Carla Markell First Lady of Delaware (Invited) Dr. Terry Horton, M.D, FACP Chief of Christiana Care’s Division of Addiction Michael Barbieri Director, Division of Substance Abuse and Mental Health, Delaware Department of Health and Social Services The Honorable Eric Davis Superior Court Judge Steve Mockbee Founder & Chairman, Bancroft Construction To register, visit: http://www.dscc.com/events/eventdetail.aspx?EventID=1860 State Senator Karen Peterson announced her retirement this week, to be effective immediately after the end of the 148th General Assembly, July 1st. With a candidate filing deadline of July 12th, those wishing to run face a tight time frame to announce, file and mount an effective campaign.
This week several bills of interest to the business community were acted on. HB 327, the Crowdsourcing Bill, passed the Senate and now awaits Governor Markell’s signature. The bill would allow for Delawareans to invest in startup companies, and these companies can raise up to $1 million. State Chamber supported legislation (HB 418) to correct a funding calculation issue for the Workforce Investment Board training fund was released from the House Labor Committee. It will go to a House floor vote soon. Legislation involving hospitals and care givers was released from the House Health Committee still containing a Chamber opposed amendment stripping liability protections for hospitals where upon discharge the lay caregiver of the discharged patient makes a mistake in care resulting in patient injury. With 6 days remaining this legislative session, and one more DEFAC meeting left to firm up the budget, expect much more legislation to be worked. By James DeChene
This week the Delaware Public Policy Institute released a study comparing the compensation packages between state employees and their private sector counterparts, excluding teachers and public safety officers as their compensation and benefit plans may differ from the rest of other state employees. The study found that on average, state employees receive 12.4% less in their paycheck, but that their compensation benefits package, including health care and pension, averages 53-102% over those working in the private sector. The purpose of the study was not to make a statement as to the role state workers play, their effectiveness or to their necessity. Rather, the intent of the study was to provide budget and policy makers critical information they need to ensure Delaware’s long term fiscal health. It is conventional wisdom that state workers make a little less, but enjoy robust benefits compared to the private sector. The actual numbers surrounding how much is spent on benefits come as a surprise, however. Driven by increases in health care coverage costs and guaranteed pension funding, a large percentage of overall compensation resides in areas requiring reform. We hope this study is helpful for budget and policy makers to get a true and impartial sense of how the numbers look for over 52% of the budget—personnel costs. Both the Expenditure Review Committee and the Delaware Business Roundtable drew attention to these cost drivers. The State Chamber of Commerce has supported the Markell administration concept of transitioning to Health Savings Accounts for new state employees and to have state employees contribute an increased amount to their health care coverage. The issues regarding long term financial liabilities the state faces with regards to state employee compensation are not going away, and they will continue to increase each year. This week DEFAC released their economic forecast and state revenues are not expected to increase more than 1% over the next three years. With a flat economy and escalating health care and pension costs, this issue will reach a critical mass sooner rather than later. We urge policy makers to make the difficult decisions now while they are hard versus waiting until they become impossible. 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. For more information on how to participate on a committee, contact James DeChene at jdechene@dscc.com. In 2015 Nemours Children’s Health System celebrated the 75th anniversary of the first patient being admitted to the Alfred I. duPont Institute. In the decades since, Nemours has experienced many changes—from advances in medicine and technology, to the opening of two new hospitals and dozens of pediatric practices across the Delaware Valley and Florida.
When Alfred I. duPont died in 1935 he left his fortune for the care of children in Delaware and Florida. That fortune is the Alfred I. duPont Testamentary Trust, and the Nemours Foundation is the operating entity that brings the vision and mission to life every day. We are now the largest children’s health system in the United States, with more than 5,000 Associates and more than 600 physicians across five states providing the full range of pediatric medical and specialty care, prevention, research, advocacy and a number of other important services. But one thing that has not changed over the past 75 years is our commitment to providing compassionate, high-quality, family-centered care to all children and families. By doing so we honor the legacy of our founder, Alfred I. duPont—a man of great compassion and a champion of equality among all men who believed “it is the duty of everyone in the world to do what is within his power to alleviate human suffering.” That belief has become embodied in the Nemours mission “to provide the leadership, institutions, and services not readily available to restore and improve the health of children.” That’s what our Associates strive for every day. Nemours is proud to be the presenting sponsor for the Delaware State Chamber of Commerce’s 179th Annual Dinner and pleased that our President and Chief Executive Officer, Dr. David J. Bailey, will be the evening’s keynote speaker. This is an exciting time for Nemours, and I invite you to join me at Delaware’s premier business and networking event to learn more about Nemours and our commitment to helping the First State’s children grow up healthy. Last week, government affairs professionals representing clients in Delaware gathered for the State Chamber’s Annual Government Affairs retreat. During the conference presentations were given by University of Delaware Center for Demographics professor Ed Ratledge, Office of Management and budget director Ann Visalli, and State treasurer Ken Simpler. All three had a similar message—Delaware faces some tough challenges, but is also seeing some positive successes along the way.
Most notable is Delaware’s aging population that is continuing to strain both the State’s health care infrastructure network, and for those receiving Medicaid, straining the State’s budget. Close to 40% of all Delawareans receive some measure of state aid, either through Medicaid, or as part of the state employee system, and year over year increases ($81 million), are a large part of the expected $150 million budget shortfall expected for 2016. In addition to an aging population, new births are significantly down, and the next generation of workers are much lower in terms of overall numbers of the Boomer generation, who are aging out of the workforce and will require health care and other services. Of other interest was speculation on how JFC members plan to fill that $150 million budget gap, and so far focus is on a combination of raising corporate income tax and franchise tax rates—something the State Chamber has warned will stifle business growth and relocation in the Delaware. The next legislative session will be a roller coaster ride for sure as budget discussions heat up. As for good news, JP Morgan Chase announced they plan to create 1800 jobs over the next 4 years to fill their newly revamped Delaware Tech Center located on property purchased from AstraZeneca. Other large employers are evaluating their presence in Delaware, with hopeful signs of both staying and growing their workforce. There is good news to be had, and it is important to focus on it. It is just as important to make sure the State is making the right decisions to capitalize on the growth opportunities available, and to create an environment to foster economic growth. State Chamber members can expect vigorous discussion coming from Dover on how best to reach this goal, and they can count on the State Chamber to be in the middle of it all advocating for its members. In late June, the Supreme Court of the United States released their decision on the highly publicized King v. Burwell case regarding the Patient Protection and Affordable Care Act. The Court considered two possible scenarios in its decision:
The Court’s decision states that subsidies will continue to be available for all eligible consumers who purchase health insurance through the exchange in all states, not just in those with state-based exchanges. Delaware has a “partnership” exchange where the state and federal government work together. There are a significant number of Delawareans currently receiving tax credits to reduce their insurance premiums for the plans purchased through the FFM (Federally-Facilitated Marketplace exchange). Delawareans were at risk of losing their tax credits had the Court ruled under the strict reading of the law. Now, consumers who purchase health insurance coverage on their own need to focus on what to do next. Here are key dates that consumers should discuss with their agent or broker:
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