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Delaware economy projected to shrink within 6 months

From the Philadelphia Fed

Commentary from A Better Delaware

In addition to higher unemployment and poor economic rankings, Delaware’s economy is projected to shrink within the next 6 months.

Delaware is one of only 9 states whose economy is projected to contract in that period.

“The leading index for Delaware was -0.7 in November. The state’s coincident index decreased, and building permits decreased in November. Additionally, the index of delivery times from the Institute for Supply Management’s manufacturingsurvey increased in November, while initial unemployment claims decreased. Overall, Delaware’s leading index forNovember suggests contraction in the state’s economy in the second quarter of 2020.”

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Carney proposes largest operating and capital budgets in state history

From Delaware State News

DOVER — Gov. John Carney’s budget proposal includes what would be both the largest operating and largest capital sums in state history. It contains a 2 percent pay raise for state employees and directs much of the state’s expected excess revenue to one-time projects like construction, building maintenance and water treatment.

The governor’s recommended operating budget totals $4.63 billion in recurring expenses and $9.9 million in a separate one-time spending bill, while the capital bond bill comes to $893 million. The general spending plan for the fiscal year started July 1 is $4.45 billion, along with $62 million in a one-time supplement.

The current bond bill, the largest in state history, is $863 million.

Of the $178 million operating increase, about $36.5 million would go to school enrollment growth, while $29.3 million would cover a raise for most of the state’s tens of thousands of employees. Collectively bargained workers like police and correctional officers would not be covered.

Teachers received 2 percent raises in each of the past two years, with most other state employees pocketing an extra $1,000 each year. The proposed 2 percent increase across the board means employees who earn less than $50,000 will see a smaller bump, while those at the upper end of the pay scale will benefit from an amount several times larger than the one handed out last year.

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New report shows DE unemployment up .1% for 6th month in a row

Report from the Bureau of Labor Statistics

A Better Delaware Commentary

The Bureau of Labor Statistics released the December 2019 unemployment numbers on Friday, showing Delaware unemployment still on the rise, with a 3.9% unemployment rate.

The rate has climbed by .1% each month since July, and is up from 3.6% this time last year.

The First State ranks dead last in economic output, faces a shrinking economy over the next six months according to the Fed, and ranks among the worst states in the nation for fiscal health.

Small businesses employ over 90% of workers in the state. Strangling these employers with new taxes and regulations will keep employment numbers on a downward trend and hurt our state.

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Delaware lawmakers are setting a new deadline for the legislative year

From The News Journal

Delaware’s top two lawmakers are setting a deadline for when lawmakers can consider bills this year.

The goal is to lower the number of bills that are hastily passed through both chambers in the final days of session and “ensure as smooth an end of legislative session as possible,” according to a Wednesday news release from House Speaker Pete Schwartzkopf, D-Rehoboth Beach, and Senate President Pro Tempore David McBride, D-Hawk’s Nest.

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Getting rid of these outdated laws could be good for Delaware’s health

In Sussex County, one of Delaware’s most rural, and fastest-growing, areas, there are only three hospitals in more than 1,000 square miles. In August, plans to bring an emergency medical center for the Georgetown area were squashed when the Delaware Health Resources Board denied Beebe Healthcare’s application to expand.

It was one of the most recent casualties of Delaware’s outdated, harmful certificate-of-need (CON) laws, which require health care providers to prove to the state that there’s a need for new facilities, devices and technologies before they can expand or upgrade.

The result is a health care a market where competition is unfairly limited and select health providers are able to get a stranglehold on competition. It’s the people of Delaware who ultimately suffer, faced with inflated prices and limited options for care. Groups like A Better Delaware are advocating for change and educating consumers about laws like these that can negatively affect them.

How we got here

In 1974, the federal government passed the National Health Planning and Resource Development Act, mandating that states have CON laws for health care in order to receive Medicare and Medicaid funding.

As some felt the laws did not reduce costs or improve access as intended, in 1986 the federal CON laws mandate was repealed. The Federal Trade Commission (FTC) and Department of Justice (DOJ) Anti-Trust Division have pushed for the repeal of CON laws in the remaining 35 states – including Delaware – that maintain them.

How we’re impacted

In Delaware, proponents of change like A Better Delaware say that CON laws create a barrier to entry into the market, inhibit expansion, and, as we’ve seen recently in Sussex County, fail to provide adequate health care services in some areas.

Delawareans have suffered the consequences of CON laws. At $9,509 per capita, Delaware has the sixth highest state government spending for health care, but also has some of the highest rates in the nation of obesity, cancer, diabetes, low birth weight, infant mortality and death before the age of 75.

Advocates of CON laws argue that they help the health care system by preventing duplication and keep prices down by restricting competition, but this contradicts the basic tenets of supply and demand. Instead, patients are forced to pay a higher price for care in older facilities with outdated equipment.

Some believe certificate-of-need laws stifle competition in health care, leading to worse outcomes for Delaware residents.
How we can change things

A report by the Mercatus Center at George Mason University estimates that by removing CON laws, Delaware could see a $270 saving on total health care per capita and $99 savings in physician spending per capita. The same study estimated increased access to services with a 42% increase in total hospitals and 17% increase in the number of ambulatory surgical centers.

In short, residents of the First State would have better access to care, and would pay less for it.

The benefits of repeal don’t stop there. The evidence from the Mercatus report suggests that hospital readmission, post-surgery complications and mortality rates would decrease in the absence of CON laws. Innovation and quality of health care would rise, in a market full of opportunity.

Delaware has had harmful CON laws on the books since 1978. Forty-one years later, it’s time to reevaluate, and make decisions that serve the health and well-being of every Delawarean.

If expanded health care options are important to you, stay abreast of the latest by subscribing to A Better Delaware’s newsletter, or by visiting them online at abetterdelaware.org. Email the organization’s Executive Director Zoe Callaway for more information about laws impacting the First State.

Full senior tax break may return

From Delaware State News

DOVER — In 2017, facing a budget crunch, legislators cut a school property tax subsidy for seniors by 20 percent, reducing it from $500 to $400. Since then, the state’s financial situation has improved considerably, prompting a number of lawmakers to stump for restoring the credit to its prior amount.

Established in the 1990s as part of an effort to discourage seniors, who are more likely than other residents not to have ties to local school districts, from voting against referendums, the tax break has come under fire and seen changes before 2017.

In 2015, then Gov. Jack Markell proposed halving the subsidy, noting the number of individuals age 65 or older in Delaware was steadily climbing and was not projected to stop. His recommendation faced fierce pushback however, with many arguing slashing the subsidy would be unfair to seniors on fixed incomes.

In 2017, legislators voted to change the residency requirement from three to 10 years. One year later, they approved a bill that would set a means-testing requirement, preventing seniors making more than $50,000 a year from receiving it.

However, Gov. John Carney vetoed the means-testing measure, saying it would create logistical problems and should be done as part of a broader effort.


Delaware not among the 36 states with major tax changes in 2020

From Delaware Business Daily

Delaware was not included in a new analysis from the Tax Foundation identifying 36 states that have major changes to their tax codes taking effect this year.

Unlike the states identified in the study, Delaware did not see substantial changes to taxation policies studied by the Tax Foundation. These policies analyzed included states’ individual or corporate income tax rates; sales tax rates; taxation policies on remote sales, marijuana or vapor products; and other reforms.

Many states in recent years have enacted new tax policies in the wake of the federal government’s major overhaul of corporate and individual taxes in 2017 and the U.S. Supreme Court’s South Dakota v. Wayfair ruling, according to the Tax Foundation analysis. The Wayfair decisions reshaped the process of taxing the sale of products on the internet.

The Tax Foundation expects the pace of tax reform activities at the state level to continue into the coming year.


$32 million apartments latest massive development planned along Christina River

From The News Journal

The redevelopment of South Wilmington, long planned to mirror changes that occurred along the Christina River’s northern banks, will be fueled in part by money from newcomers to the city.

Near the southern approaches of the Walnut Street bridge, across from the structurally troubled Christiana Landing townhomes, Washington Place Equities of Baltimore is planning to build the area’s first new apartments in years.

By the middle of 2021, the developer hopes to open the first of its twin 150-unit structures, called Riverhouse I and II, along A Street.

Subsequent construction on the second building will bring 300 new apartments to the geographically isolated area, which in 2010 had a population of just 8,000.

The 5-story buildings should be complete after the opening of a nearby $27 million wetlands park, and a $28 million Christina River bridge that connects to the Wilmington Riverfront.

The projects add to a litany of other changes impacting the working-class Southbridge neighborhood, including the opening of a local bank and the arrival of a union training center.

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Lawmakers start 2020 session expecting more money, return to same controversial topics

From the News Journal

Delaware lawmakers returned from their six-month break Tuesday to everything they weren’t able to get done last year — and a projected surplus of about $200 million.

For many divisive issues such as legal weed, gun control and a $15 minimum wage, it’s not clear if much has changed since lawmakers left in July.

But surplus cash no doubt will ignite new debates about how and where it should be spent.

It could mean more money to spend on government-paid projects, such as school renovations or road repairs. But it’s also a source of anxiety for the General Assembly’s top leaders, who don’t always agree with the governor, or one another, about where it’s needed the most.

“It’s more difficult to run the Legislature when you have a surplus than when you have a deficit,” said House Majority Leader Valerie Longhurst, D-Bear. “Everybody will be down in Legislative Hall putting their hands out.”

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Delaware’s AAA bond ratings upheld

From The Delaware Business Times

WILMINGTON – Delaware once again received the highest possible bond ratings from all rating agencies ahead of the state’s issuance of $300 million in general obligation bonds later this month.

The news that all four major bond rating agencies – Fitch Ratings, Moody’s Investor Services, S&P Global and Kroll Bond Rating Agency (KBRA) – upheld Delaware’s AAA bond rating in January reviews was heralded by Gov. John Carney’s office in a Wednesday, Jan. 15, announcement. The state last queried ratings agencies in August and next plans to issue its 2020A series of bonds Jan. 22.

The ratings are important because higher grades translate into lower interest costs in repayment of the bonds. The agencies look at a variety of criteria, including a state’s economy, government’s financial performance and management, debt load, long-term costs, and political structure. States that analysts believe could better whether recessions or economic downturns are in turn seen as safer risks and awarded higher ratings.

“Over the last three years, we have climbed out of a $400 million budget deficit to create a $200 million surplus,” Carney said in a statement. “These are funds that will ensure Delaware has the flexibility to continue making improvements to our schools, our local economy, and the overall health of our state.”

The agencies noted the successful efforts the Carney administration and the Delaware General Assembly to bolster reserves by creating a new Budget Stabilization Fund that has a current balance of $126 million with S&P stating that “we believe the state can maintain better credit characteristics than the U.S. in a stress scenario.”

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