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Why is the state so out of touch from what its own residents are going through?

There is little public attendance or media coverage of public budget hearings that deal with billions of taxpayer dollars. Public involvement is severely missed in this process. Delawareans are simply presented the Governor’s proposed budget in January, after many hearings and proposals are done and considered.

The Governor holds a significant amount of power in the process, which results in a near-complete state budget before the Joint Finance Committee hearings even begin in February. Due to the lack of attendance at the initial budget request hearings, February would essentially be the public’s first say in the process (through their elected officials on the JFC). However, the JFC does not have as much say as you might imagine, with pre-allocated funds for schools, government agencies and more.

In a bid to enhance the transparency of this process and to hold not only the Governor, but the agencies presenting budgets accountable, A Better Delaware has summarized what was delivered in the recent budget request “public hearings,” below.

Strikingly, there was clear disregard and complete lack of sensitivity to what many Delaware businesses, households, and residents have been through during COVID-19. While businesses were forced to reduce their operations or even close down—costing revenues, jobs, and even life’s work—Delaware agencies are presenting budget requests with 4%+, 9%+, and 18%+ increases over FY 2021 budgets.

Why is the state so out of touch from what its own residents are going through?

The Department of Agriculture submitted a budget request that was the same as FY 2021, stating:

 “This request is fiscally responsible while allowing our Department to fulfill its mission of serving our agricultural community and providing a wide array of consumer protection services for Delawareans.”

Unfortunately, other agencies operated as if the coronavirus was a hallucination, and moved forward with ever-increasing budget requests, despite a state revenue forecast that could change any day.

The Department of Justice requested a 3.49% increase to hire dozens of new attorneys and staff. How much funding and how many attorneys are going towards the numerous out-of-state affirmative litigation cases that Delaware has joined in on recently? Meanwhile, workers in Delaware across various industries have lost their jobs due to COVID.

Delaware State University requested a 9.76% increase, much of which can be attributed to “campus improvements.” With DSU’s president now working for Biden and bringing in multimillion dollar donations, the request should be updated to show some fiscal responsibility and remove the burden of this massive budget increase from the state’s taxpayers.

Perhaps the most alarming is the unabashed 18.75% increase requested by DELDOT. Despite continuing with full funding during the pandemic, the agency has presented the largest budget increase in the state, totaling an additional $62.1M in taxpayer dollars. DELDOT was able to keep their full budget, receive federal CARES Act funding, and is now asking for a budget increase on top of that. Meanwhile, our restaurants, hotels, retailers, and more are losing capacity, revenues, staff, and even shutting down—with limited assistance offered to prevent this.

Delaware taxpayers turning a blind eye to the budget formation process has unwittingly enabled state leaders to abandon the concept of fiscal responsibility when it comes their money.

Minnesota and New Mexico have been examining better government spending through a partnership with the Pew-MacArthur Results First Initiative, where policymakers look at the effectiveness and return on investment of programs to determine where to allocate taxpayers dollars. For example, Minnesota agencies were asked to provide evidence of desired outcomes along with their budget request for each program. This was not present in many Delaware agency presentations.

It’s time for Delaware lawmakers and our Governor to actually address the ever-growing budget by instituting a policy of data-based spending. Agencies can use existing funds more efficiently, invest in programs that improve life for the state’s residents, provide more economic opportunity, and show that they can operate by normal budgeting standards that businesses and individuals already do. There have been efforts to fix this here before, but they have failed.

The Government Accountability Act, a bipartisan bill that never made it to a vote, would have made the annual budget process part of a “performance management system of strategic planning, performance metrics and performance budgeting,” that would make State government more efficient, reduce costs, and eliminate waste in the process and operations executed by the state.

Another bill that never made it to a committee hearing would have implemented a mandatory window to wait before voting on any budget bill, in order to allow for adequate evaluation and discussion before being pushed through. While not bipartisan, this bill would have forced lawmakers to actually read the budget before voting to pass it.

The time to do better and be better is now.

Delaware can’t brew expansion

Delaware has almost one dozen craft breweries and brewpubs, some with multiple locations statewide, but the industry could be growing more than is currently allowed. In what sems to be another arbitrary thing on our books, Delaware law prevents these establishments from expanding beyond three locations in the state.

In September 2019, the popular Iron Hill Brewery grew their business 20 miles over state lines in Exton, PA due to this restriction. Iron Hill wanted to expand in Delaware, but simply couldn’t, pushing them to take their business—and the jobs it created—across state lines.

“It puts an unnecessary burden on these companies that are trying to expand and create jobs here in Delaware,” said State Representative Bryan Shupe, “We’re hindering their ability to compete.”

Representative Shupe sponsored a bill in 2019 that would have eliminated this limit on brewpubs, though it never made it out of committee. A new version of the bill is expected in 2021, and the hard lesson from Iron Hill should push lawmakers to reconsider the measure in a bipartisan manner.

Not only does the current limitation hurt small businesses, but stalls the growth in jobs that they could provide. After the major hit to our labor market from COVID-19, anything that hurts job creation should be heavily considered, and at minimum given a chance to be heard, unlike in 2019.

Our local businesses are struggling to stay afloat. Many brewpubs are a part of the restaurant industry, which has been hit particularly hard by the pandemic. Nationally, the restaurant sector had already lost $120 billion in sales by May, only 2 months after the initial restrictions were enacted. In Delaware, Governor Carney’s new COVID-19 restrictions limiting restaurant capacity to 30% went into effect on November 23.

These businesses cannot survive on takeout alone, which may soon be the case. The 100% costs of staying open aren’t covered by the 30% of sales they are able to bring in. According to the Delaware Restaurant Association, up to 30 percent of Delaware restaurants could close if they do not receive assistance.

This is stacked on top of the struggle of being locked in place by the current Delaware Code.

“You have to pick three locations that have the best opportunity to grow your business and make money. These smaller communities without brewpubs, I don’t think they are going to see them,” Harry Metcalfe, co-owner of Revelation Craft Brewing Company said.

The brewpub restriction is only one example of the burdensome regulatory code that exists in Delaware. These regulations hurt all types of businesses statewide and are rarely reviewed or changed.

As of last year, Delaware’s regulations included 104,562 restrictions, 6.7 million words, and would take 9 weeks to read through—and all of this is in addition to federal regulations. For a small state, that’s quite a regulatory burden.

Delaware ranked 42nd for its regulatory environment and 37th for economic environment pre-COVID. Our lawmakers should be working to serve those they were elected to represent by addressing the job killing regulations. The brewpub bill is a good place to start, but is hopefully one of many steps in a process to truly better our state.

The Restaurant Industry: The Other COVID Fatality

You’re hearing it everywhere: this pandemic has really hurt small and local businesses. Perhaps one of the most impacted by COVID-19 restrictions has been the restaurant industry. Restaurants typically have extremely small profit margins, meaning any hit to their operations could spell disaster.

Nationally, the restaurant sector had already lost $120 billion in sales by May, only 2 months after the initial restrictions were enacted. The reach of this loss must be understood; a blow to this industry kills a large percentage of jobs, and hurts other businesses from florists, to food packagers, to liquor salesmen, and more.

The situation for restauranteurs is dire: Yelp reported that by May, 53% of the restaurants on their platform were now permanently closed, while OpenTable said one in four were at risk of foreclosure. These numbers were when other options, like outdoor dining, were available. As we move into the winter months, it is difficult to grasp the impact this may have.

Governor Carney’s new COVID-19 restrictions limiting restaurant capacity to 30% went into effect on November 23. This new Executive Order will further cripple an entire industry that has been struggling—and failing—due to similar orders for eight months.

These businesses cannot survive on takeout alone, which may soon be the case. The 100% costs of staying open aren’t covered by the 30% of sales they are able to bring in. For many, this year was the one in which their business, livelihood, and dreams shut down forever. According to the Delaware Restaurant Association, up to 30 percent of restaurants could close if they do not receive assistance.

If only 1.44% of Delaware’s positive COVID cases in November visited a bar, and 4.63% a restaurant, why are we targeting this industry?

The Delaware Restaurant Association reports close to 2,000 eating and drinking locations in the state, which provide around 50,000 jobs and $2 billion in sales. This sector is the largest small business employer in Delaware. Carrie Leishman, President of the Delaware Restaurant Association, estimates thousands of workers losing their jobs around the holidays due to the new limit.

Meanwhile, retail and other industries have operated without issue, despite being a major catalyst for public crowds. Black Friday produced a packed crowd at the Christiana Mall, even in the food court. The absolutely arbitrary parameters of what has made a business “essential” is precisely what is killing this massive industry nationwide.

Delaware’s economy cannot shoulder this burden. Pre-pandemic, we were ranked 34th for employment and one of the worst states for small business. Now we face hundreds or thousands more jobs on the chopping block with less unemployment assistance from the state than before. The Delaware restaurant industry has received about $25 million in state assistance so far, and anticipates $25 million more. Unfortunately, it may not be enough to counter the restrictions.

Add in the newly drafted minimum wage bill and other costly proposed employer mandates that are likely to be brought forth for a vote in the 2021 Legislative Session, and our restaurants—and the jobs that they offer—may never recover. It is far past time to take action and save livelihoods, not just lives.