by James DeChene
Several bills important to the business community were acted upon this week in Dover. On Wednesday, Governor Markell signed HB235, the Delaware Competes Act, into law. As mentioned previously, the Chamber strongly supported this legislation that modifies how Corporate Income Tax is calculated, phasing out the multifactor apportionment calculation, and phasing in a single sales factor apportionment. There was spirited floor debate on Sen. Marshall’s SB 39, legislation increasing the minimum wage. As amended, the bill would raise Delaware’s minimum wage from $8.25 by $.50 in 2017, and then again for the next 3 years, topping out at $10.25. A provision to index to COLA after 2020 was stripped out of the language in order for the bill to pass, and the final vote was 11-8. The bill now heads to the House, where it will be heard in the House Economic Development, Banking, Insurance & Commerce Committee. Stay tuned for more intel as the process continues. A bill supported by the State Chamber, HB 253, which changes the earned income tax credit from nonrefundable to refundable and capable of exceeding the tax amount otherwise due. The credit is reduced from 20% of the corresponding federal earned income credit to 6% for 2017. That percentage increases 1% each year until it reaches 15% in 2026. The House Administration Committee heard legislation creating paid Family Medical Leave of up to 12 weeks for state employees who have at least 12 months in their position in order to qualify. The Chamber has concerns with this bill, as it continues a progression of measures increasing the cost of public employees in Delaware.
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Good morning, my name is James DeChene, Government Affairs Director for the Delaware State Chamber of Commerce. On behalf of the state of Delaware’s largest coalition of businesses we stand opposed to Senate Bill 39.
The Chamber does not reach this conclusion lightly, especially as Delaware’s economy continues to struggle in the aftermath of the Great Recession. While our unemployment rate remains below the national average, overall wages have not risen to where they were prior to 2009, and unfortunately, SB 39 does nothing to alleviate that problem, and in many ways does more to exacerbate the situation. We believe that there are examples of the seriousness, and the aftermath, of proposals such as SB 39 that should serve as warnings to Delaware. Numerous articles have been written on the number of small businesses, especially restaurants, which have been forced to close their doors as a result of significant increases in the minimum wage. Areas such as Seattle and Los Angeles have seen such closures, as well as employers forced to roll back benefits, such as matching 401(k) contributions, in order to cover the costs of higher wages. In addition, close to home in Philadelphia, nonprofits that contract with the city say they can’t afford the new $12 per hour wage scale without help from the city. They want more money from the city or an exemption to allow them to pay less than $12 an hour. This was also the case in Los Angeles, where the very unions that pushed for an increase in the minimum wage then petitioned City Council for an exemption for their members to be paid lower. On the employee side, articles have also been written about employees choosing to work part time in order to maintain their state benefits, even when full time work is offered. What remains is clear, and has been evidenced by actions national level retailers have taken in recent months, is as the labor market continues to strengthen, the demand for workers will increase, and there will be a natural, market driven increase in wages. Special consideration should be taken as to what this will do for our younger workers, currently the highest percentage of minimum wage earners in the state, as well as those with developmental disabilities. A marked increase in the minimum wage could serve as a barrier for those looking for first time employment, traditionally in areas such as food service, where these workers start to learn the soft and hard skills necessary to move up in the workplace. Impediments to youth employment, especially in our cities, will cause additional problems to be addressed. Speaking directly to those with disabilities, organizations like Waggies by Maggie, whose entire workforce is comprised of workers with intellectual disabilities will be forced to close their doors if faced with an increase in the minimum wage. I would urge the members of this committee to consider an alternative measure aimed at low income workers, without suffering the employment losses that raises to the minimum wage are proven to have, which is to increase the Earned Income Tax Credit. It matches at the first earned dollar, and phases out as a worker hits an income threshold. The goals are the same, with positive outcomes. by James DeChene
The second half of the 148th Legislative Session convened on January 12th, with a full docket of legislation carried over from last year to parse through, along with new legislation requiring action. Right out of the gate, the House faced a Suspension of Rules vote, brought by Rep. Kowalko, to override Governor Markell’s veto of HB 50, the “Opt Out” bill the State Chamber has opposed. That vote failed 13-26, but the bill has been placed on the Ready List, meaning it can be brought up for a similar vote at any time. In good news for Delaware business and overall economic development policy for the state, HB235, the Delaware Competes Act, passed the house last week with an overwhelming majority 36-2 with two not voting. The bill changes how corporate income tax is calculated in Delaware, changing from a multi-factor to a single sales factor calculation. Delaware is currently only one of nine states still using the multi-factor assessment, and the only one east of the Mississippi. This bill will ease the tax burden on companies looking to expand personnel and investments in property and infrastructure in Delaware, and has been endorsed by the State Chamber. The bill has its Senate hearing this Wednesday with a full floor vote on Thursday. It is expected to pass handily, and will be signed by the Governor. Also this week will be a hearing on SB 39, a bill to increase Delaware’s minimum wage by $.50 a year between 2016 and 2019, and then by $1.20 a year until 2023, where it will be $15.05 an hour. The State Chamber stands in opposition to this bill for a variety of reasons, including the impact on small businesses and potential loss of full time jobs, as seen in locales such as Seattle and Los Angeles. The bill is expected to clear the Senate Labor Relations Committee, where it will be brought to the Senate floor for a vote, as soon as Thursday. Plenty more to come in the coming months, so stay tuned. 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. by James DeChene
In recent weeks news stories have been written on the impact of minimum wage hikes in places like Seattle, Los Angeles, and now New York State. A few interesting items to note stemming from these reports:
Last year a task force was created to study the low wage, service worker industry in an attempt to quantify what a minimum wage increase would mean to employers and their employees. A subsequent piece of legislation was introduced to increase Delaware’s minimum wage to $10.25 per hour by 2019. Debate on this bill is expected in 2016. |
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