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First State Spends First, Taxes Second

It’s no surprise that Delaware lawmakers continue to promote new taxes and tax increases to cover their bloated spending. This has become the new norm and is likely to continue as healthcare spending balloons, new programs are established, and administrative costs climb.

Dover’s unquenchable thirst for additional spending means taxpayers are routinely called on to bail them out through higher fees and taxes. Promised, yet unfunded retirement obligations have resulted in a multi-billion dollar concern.

The state’s “taxpayer burden” would be $27,000 per taxpayer to cover a $9.1 billion deficit. To put this into perspective, Delaware’s FY 2020 state budget is $4.4 billion, or half of the state’s current debt.

The spend-then-tax structure that has been utilized through recent sessions has been to the detriment of many Delawareans, who cannot afford to pay more taxes. These groups include senior citizens and low-income families and individuals, who are meant to be some of the populations we help through government action.

This spend-then-tax structure also impacts the businesses that provide jobs to Delaware citizens. Since the 2007 recession, state lawmakers have raised every Delaware business tax, many of them multiple times. These tax increases have been passed on to the people in higher prices and lower gains in wages.

A statewide property tax, increased income taxes, and a statewide sugar tax are just a few examples of the state’s attempt to shift the burden to the people. At some point, taxpayers can’t afford to dole out their hard-earned money to cover an irresponsible spending structure. Instead of looking for new and pervasive ways to fund the budget, lawmakers should consider re-evaluating certain costs, programs, and regulations in order to reduce our spending.

This system isn’t just a burden, it’s unsustainable.

We will never stop playing catch-up with our current model. Taxpayers will continue to carry the burden of the state as debt accumulates. This is far from the path we should take to ensure a better future for our residents, families, and businesses.

Big Delaware-based breweries are picking other states to expand. This is why

From the News Journal

When commercial real estate agents brought Iron Hill Brewery & Restaurant officials a possible location for a new brewpub, the site looked promising.

It was the former home of Don Pablo’s Mexican restaurant near the Christiana Mall, which closed in late 2018 after a 19-year-run.

Not only was the site in a high-traffic area, but the brewery had previously converted a former Don Pablo’s restaurant in South Carolina and it wasn’t a big job, thanks to Don Pablo’s brick buildings, which fit Iron Hill’s aesthetic.

But Iron Hill, which got its start on Newark’s Main Street in 1996 and has grown into a regional chain with 19 locations in five states, couldn’t pull the trigger on the deal for one reason: Delaware law.

Delaware Code states that a licensee is limited to three brewpubs in the state. And since Iron Hill already had spots in Newark, Wilmington and Rehoboth Beach, they were forced to expand elsewhere.

 

Read more: https://www.delawareonline.com/story/life/2019/10/10/legislators-looking-change-delaware-code-brewpubs/3906398002/

Economic changes push need for new workforce training

From Delaware State News

DOVER — The future of work is changing.

People born in 2019 will probably have very different career paths than their grandparents or even their parents.

Globalization, automation, computerization — the economy of the 21st century is shaping up to be dramatically different than the one that emerged after World War II and led to prosperity for so many Americans in the second half of the 1900s.

If the newest generations are to be successful, business leaders, education officials and policymakers will have to keep an eye to the future and make changes, several people said Tuesday at a conference on workforce development.

The event, hosted by the State Chamber of Commerce, was intended to shine a spotlight on issues companies face in finding qualified workers.
Despite the unemployment rate falling to pre-recession levels (including, earlier this year, the best months in that regard in 50 years), the state still has a scarcity of workers in many fields, especially blue-collar ones such as construction and autowork.

While it’s unknown what Delaware’s economy will look like in 20 years, it’s safe to say it probably won’t be predicated on the four Cs — chemicals, credit cards, cars and chickens — that have been so important to the state for decades.

 

Read more: https://delawarestatenews.net/news/economic-changes-push-need-for-new-workforce-training/

Iron Hill opts for production location in Exton, PA after inaction by General Assembly

From Delaware Business Now

After an unsuccessful effort to change a Delaware law that limits the number of breweries owned by one company, Wilmington-based Iron Hill has signed a lease to build a production brewery in Exton, PA.

The brewery is expected to open in the summer of 2020 at The Shops on Eagleview Boulevard (240 Eagleview Boulevard).

The location will be known as Iron Hill Brewery & Taphouse.

Iron Hill has three breweries in Delaware and needed a change in the law that limits it to that number. The state’s liquor laws also ban supermarket sales, while limiting the number of liquor stores owned by one entity to two.

Pennsylvania, while maintaining a system of state-owned liquor stores, has loosened regulations on sales of beer and wine at grocery and convenience stores.

 

Read more:

https://delawarebusinessnow.com/2019/09/iron-hill-opts-for-production-location-in-exton-pa-after-inaction-by-general-assembly/

Despite improvement, Delaware’s 2018 taxpayer burden still gets an F

From The News Journal

Most people have budgets to manage their money, pay their bills and save what is left.

Spending more money than you bring in can cause problems, and that’s why the Chicago-based think tank Truth in Accounting analyzes every state’s expenses and how much revenue they bring in.

Delaware is one of nine states to receive a grade F for its taxpayer burden. Those nine states would need additional money from taxpayers to pay off its bills.

Delaware would need an additional $27,100 per taxpayer to fully pay its bills each year, according to 2018 data released by TIA.

The taxpayer burden lowered to -$27,100 in 2018 from -$30,400 the year before. TIA calculated taxpayer burden by the state’s bills divided by the number of taxpayers.

“Though it got better,” said Sheila Weinberg, founder and CEO at TIA, “Delaware is more of an outlier because they don’t put enough money towards retirees’ health care liability and pension liability.”

Weinberg says Delaware saves 3 cents for every dollar for retirees’ health care liability. The only worst state is New York at 1 cent.

Read more:

https://www.delawareonline.com/story/news/politics/2019/09/30/despite-improvement-delawares-2018-taxpayer-burden-still-gets-f/2370396001/

Dover Mall expansion idles

From Delaware State News

DOVER — In 2017, extensive legislative groundwork was laid to significantly grow the almost 40-year-old Dover Mall.

The owners, Simon Property Group along with Western Development Corp., showcased blueprints that would add about 54,700 square feet for new stores to the current mall and build a “power center” to the east with 22 buildings covering more than 550,000 square feet.

The hitch that would make the expansion possible was a proposed Del. 1 toll road entrance on the east side of the mall that would cost an estimated $31 million to build.

A new road would allow for direct access to the expanded mall complex from the state’s arterial highway.

In the developers’ vision, the Dover Mall would start to resemble the Christiana Mall, which boasts 175 stores plus several outlying retail centers.
John Paradee, a Dover lawyer representing the firms, helped steer seven different pieces of legislation supporting the project in 2017.

“The Dover Mall is in jeopardy as it currently exists,” he said at the time.
Mr. Paradee claimed the construction of the access road would greatly enhance the mall’s profile, which would ultimately bring more companies and shoppers.

“We’re already talking to people who have told us, ‘if you build it, we will come,’” he said at the time.

Read more:

https://delawarestatenews.net/news/dover-mall-expansion-idles/

The First State May be the First to have a Statewide Soda Tax

Delaware may be eyeing a sugar tax in the near future, as the Delaware Department of Health and Social Services begins exploring the possible effects of a statewide soda tax.

While no state has a state-wide soda tax at this time, all 7 U.S. cities that have enacted one have a tax structure that places the burden of the tax on the distributor. This increases the cost to companies like Coca-Cola and Pepsi to sell their product and passes off some of the burden in a cost increase to the consumer.

Businesses in these areas are already feeling the strain from the soda tax as exampled by Jeff Brown, owner of a now-closed ShopRite in Philly. Brown cites the Philly soda tax as the reason behind closing the doors of one of his stores, and says revenue has dipped by 20 percent.

“So the customers have a lot of choices outside the city where they can avoid this tax,” Brown said. “They voted with their feet.”

Delaware would likely witness a similar scenario, where consumers would make the short trip across state lines to purchase cheaper products. Moving profits out-of-state will harm businesses and the communities they serve– just like in Philadelphia.

These initiatives also place a disproportionate burden on lower income families, who consume more sugary drinks on average. Low income individuals also staff the jobs that are at risk of being impacted by these initiatives, proving the measure to be dually burdensome to this population.

According to the Tax Policy Center, this method of taxation is most beneficial if the goal is to increase tax revenue, but not to encourage healthy behavior.  So why are Delaware legislators considering a soda tax?

Good question.

Chicago and Santa Fe have already repealed their soda taxes after opposition from constituents, business owners, and companies distributing in these areas. In Philadelphia, the tax has fallen short of revenue projections and has dropped beverage sales by 51%.

If this measure has been less than successful in the cities it has been tested in, our legislators should avoid testing it across our entire state—at the detriment of Delaware families, communities, and businesses.

Christiana Care Health System, state’s largest private employer, to offer paid parental leave?

From the News Journal

Christiana Care Health System delivered good news to its employees Wednesday: It will start offering paid parental leave to employees — a benefit the state’s largest private employer has not previously offered.

Beginning July 2020, the health system will offer at least 12 weeks of paid parental leave to its 12,000 employees. The leave will only apply to employees who are parents for the birth, adoption or fostering of their child.

“We know that the bond formed between mother and child in the first few weeks of life can have a tremendous impact on the health of the baby and the well-being of the family,” Dr. Janice Nevin, the health system’s CEO, said in press release.

Nevin said in an email to employees that the issue became a focus for the administration last year after a survey about benefits.

Christiana’s move followed the Delaware General Assembly last year passing legislation to grant state employees 12 weeks of paid family leave. The state government is the largest employer in Delaware.

 

Read more:

https://www.delawareonline.com/story/news/health/2019/09/18/christiana-care-health-system-offer-paid-parental-leave/2363998001/

Delaware jobless rate up a tenth of a percent as signs of a mild slowdown appear

From Delaware Business Now

Delaware’s seasonally adjusted unemployment rate in August 2019 was 3.4 percent, up from 3.3 percent in July.

The Delaware Department of Labor says the state is seeing a mild slowdown, but nothing akin to the deep recession of 2008 and 2009. A bright spot is teen employment, with a much lower jobless rate for female teen workers.

The state reported 16,600 unemployed Delawareans in August 2019 compared to 17,700 in August 2018.

The US unemployment rate was 3.7 percent in August 2019, unchanged from July. In August 2018 the US unemployment rate was 3.8 percent, while Delaware’s rate was 3.7 percent.

In August 2019, seasonally adjusted nonfarm employment was 466,000, up from 464,500 in July 2019.

Since August 2018, Delaware’s total nonfarm jobs have increased by 5,600, a rise of 1.2 percent. Nationally, jobs during that period increased by 1.4 percent

In its monthly commentary, the Labor Department noted that in August, The number of unemployed residents rose above 16,000 for the first time since March, to 16,600, while the number of residents with jobs fell for the first time this year (last month’s tiny decrease was revised to a tiny increase).

 

Read more:

https://delawarebusinessnow.com/2019/09/delaware-jobless-rate-up-a-tenth-of-a-percent-as-signs-of-a-mild-slowdown-appear/

Certificate-of-Need Laws and Delaware Health Services

Why does Delaware still allow a virtual monopoly in health care that drives up everyone medical bills?

Delaware has certificate-of-need (CON) laws, which require that health care providers show a need in the community for new devices, certain technologies, or expand or establish a practice.

Instead, research finds that CON laws are associated with higher health care spending per capita and higher physician spending per capita. In Delaware, CON laws create a barrier to entry into the market, inhibit expansion, and fail to provide adequate health care services in some areas.

Delaware has seen these consequences of CON laws in health care. The First State has the highest average monthly insurance premium and one of the lowest percentages of medical residents retained.

Additionally, Delaware spends more per-capita on healthcare than every nearby state excluding New York, and ranks 7thoverall for state health spending. For health care spending for patients over 65, Delaware ranks 5thhighest, 6thhighest for state government spending.

This isn’t the only negative impact these laws have had on our state. The presence of a CON program tends to be associated with fewer rural hospitals. We recently saw a battle in Sussex County regarding an expansion of services, since currently only three hospitals service 1,196 square miles of the rural county. The request to expand was denied.

Proponents of CON laws argue that they help to reduce health care costs and increase access. Contrary to typical supply and demand, they also argue that a shorter supply of health care services in the market results in a reduction of average prices.

A report by the Mercatus Center estimates a savings of $270 on total healthcare per capita without CON law, and an increase in access to hospitals and ambulatory surgical centers. They also estimate an increase in local services without these restrictions, helping residents access healthcare and keeping spending local.

Delaware has utilized the CON process since 1978. Forty-one years later, we may need to re-evaluate and better serve our residents.