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Carper sets stage with ENCORES bill to support live entertainment venues

From Delaware State News

MILTON — Live entertainment venues look to get a boost, as Sen. Tom Carper, D-Del., discussed his newly introduced bill at Milton Theatre on Monday, which will give live entertainment venues across the country a tax credit to make up for revenue lost to canceled shows amidst COVID-19.

The Entertainments New Credit Opportunity for Relief & Economic Sustainability (ENCORES) bill was introduced by Sen. Carper and Sen. Jon Tester, D-Montana, to Congress on July 29. The bill has been assigned to the finance committee in the House of Representatives to await further discussion.

Sen. Carper said his love for the arts is what pushed him to create the ENCORES bill.

“I love music, I love live performance, it’s one of the joys of my life, and I think it’s one of the joys of a lot of people’s lives,” Sen. Carper said. “If we didn’t have music and the arts, we would be missing a whole lot. You don’t have to be in New York City, Philadelphia, Boston, or LA to find great music. We have it here.”

The live entertainment industry has dealt with show cancellations, ticket refunds and strict health regulations since the spread of COVID-19, making it one of the hardest-hit industries by the pandemic thus far. Live entertainment simply does not exist in the same way since March, as they were one of the first industries to shut down and have faced many hardships in trying to reopen safely.

Milton Theatre Executive Director Fred Munzert spoke Monday about how COVID-19 has taken a significant toll on its staffing and revenue.

“On the 13th (of March), we shut down. It was just so emotional for us and everyone who worked here. (For) almost 30 employees and contractors, this was our life blood, our passion, our love, and for many, our mortgage payment, putting food on the table for our kids, all of those things,” Mr. Munzert said.

“We let everyone go. We had to. Our income stopped in a day. Then, the influx of calls for refunds. $150,000 almost immediately of requests for refunds came in. It was remarkable, the impact and terrifying.”

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Help Delaware Workers Now

Delaware employers and workers are scrambling to get back to normalcy and get back to work. Our economy is suffering and many are left to wonder what will happen to their businesses and livelihoods if lockdowns persists, or a second wave of COVID—19 hits.

Things are tough now, but they have never been easy. Pre-pandemic, Delaware was the 7th worst place to start a businesses and ranked 34th for employment. Many factors contributed to the First State being left in this position, but one stands out: regulations.

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.

State and local regulations often directly intervene in specific markets, causing greater distortions than broader federal regulations. State regulations on industries, employers, and workers restrict competition and are job killers.

Delaware ranks 42nd for its regulatory environment and 37th for economic environment. The state ranked worst in the nation for its regulatory environment, West Virginia, also ranks 48th for its economic environment, and this trend holds for the states with the worst regulatory environments. Regulations are an economic plague.

Now, more than ever, we must address our codified limitations to an economic boom and a better business climate. Currently, one out of eight Delawareans included in the labor force are unemployed and the state has lost close to 50,000 jobs since last year.

Governor Carney recently signed an Executive Order creating the Rapid Workforce Training and Redeployment Training Initiative to assist Delaware workers and their families who have lost jobs and income due to the COVID-19 crisis. This program will help identify key areas for employment and implement rapid training and certifications to get people back to work faster.

Other actions like this could be done swiftly to help Delaware workers and businesses.

In last week’s blog, we mentioned the apprenticeship ratios in Delaware that are massive job killers. Other items, such as licensing requirements and permit processes could be fixed through rapid action to reduce the regulatory burden on employers and workers. These regulations hurt the ability for places like barber shops and nail salons to start their businesses.

The state’s prevailing wage sets an artificially high price on contractor wages on government projects, effectively reducing the total number of jobs that are filled and limiting the work that can be done.

Helping independent contractors has been an important issue that has come to light during the pandemic, as many statewide were unable to file for unemployment due to regulations that technically held up the process for benefits to be distributed to these workers. Other restrictions on licensing and independent firms also keep doctors and lawyers from locating and developing their practices in Delaware.

Environmental, energy and utility regulations place a major strain on many businesses, especially manufacturing businesses.

Long term, Delaware should take steps to address its massive regulatory body. Regulatory reform is not a new wave idea springing from the ashes of coronavirus. Notable regulatory reform programs exist in Indianapolis, San Diego, New York City, Colorado, Minnesota, Virginia, and in our neighboring states Pennsylvania and New Jersey. In May 2019, Idaho did an entire regulatory reset, where their state government eliminated all regulations and will only bring back the ones it chooses.

While mimicking Idaho would be a massive undertaking, the state could create an independent reform commission, and address regulations by deciding which are truly beneficial, focus on outcomes instead of processes, simplify regulations to make it easier for businesses to understand, and be transparent in their process.

Last May, a bill was introduced in Delaware that would have required an economic impact statement for regulations, as well as a timeline for review of regulations with an emphasis on minimizing the economic impact they would cause. This bill was stalled in committee and never received a vote.

This should be a consideration for the Delaware legislature in the next legislative session, but more immediate actions like those listed above can be taken now to help Delawareans.

It’s time to fix job killing regulations

In a move uncharacteristic for our current state leadership during the pandemic, the Delaware Department of Transportation (DelDOT) recently announced new efforts to support small businesses in Delaware. The Small Commercial Entrance process will reduce costs and wait time for eligible small businesses, and an expedited review and approval process is expected before the end of summer.

More businesses and business groups are speaking out about the lack of attention and help they have received from state leadership, after 4 months of the State of Emergency and little clarity or assistance. For small businesses and new businesses, the DOT rule changes are a bit of hope at this time.

If this can be done in the DOT, other agencies could potentially issue rule changes to help employers and workers since the administration refuses.

Businesses have been crying out for help after being forced to shut down, but workers are still suffering through the impact of COVID-19 in Delaware.

Delawareans who were laid off at the start of the shut downs and applied for unemployment in March have yet to receive benefits. Often it is difficult to get an answer when contacting the office for answers or help with payments. Without work and without unemployment being delivered in a timely manner, this has left Delawareans wondering how they will stay afloat for the remainder of this pandemic. This would position the Delaware Department of Labor (DOL), as the next logical entity to make rule changes in order to help struggling Delaware workers find jobs.

A big concern with current DOL anti-business regulations is the mandatory and restrictive apprenticeship ratios that prevents Delaware businesses and contractors from hiring new workers now.

Delaware’s ratio means that you can have 1 apprentice for every 3 journeyperson. Businesses and contractors are not permitted to hire a second apprentice until there 6 journeypersons, and so on as you hire more apprentices. These overly restrictive rules sideline Delaware workers from good paying jobs right now.

Bottom line: these mandatory ratios are job killers.

For instance, there are close to 30 trades that are restricted to only hire one apprentice for every 5 journeypersons. The DOL touts 1,500 current apprentices, but if this ratio was adjusted to 1:1 or 1:2, this would result in thousands of new hires immediately.

By DOL making this change in the manner that the DOT issued their rule changes to help small businesses, trade workers in Delaware would have more opportunities for employment, and the state could see an increase in total jobs available. There are likely other opportunities for the DOL and other agencies to readdress their rules and regulations to help Delaware’s workers.

State regulations reduce job opportunities and limit the workforce—especially for unskilled or low-skilled workers—and must be addressed in order to get people back to work.

A better Delaware would establish an inter-agency committee immediately to help put Delaware back to work right now.

‘I am going to be screwed’: Unemployed Delawareans face loss of federal benefits

From Delaware Online

Qiana Jones’ catering business, founded in late 2018, really took off last year. But when the coronavirus pandemic hit in early 2020, Jones was forced to return $15,000 worth of payments for canceled events, sending her bank account into the negative.

Jones did not receive her unemployment insurance until the week of July 4. Two weeks before she was paid, she was handed a 60-day eviction notice and moved in with her brothers.

“I’m 48 and sleeping on an air mattress in a living room, and I’m trying to find a place now,” Jones said through tears. “It’s difficult. It’s really hard.”

Jones is among the 12.5% of Delawareans who are unemployed as of June. For some, the $600 per week enhanced unemployment benefit is all that is keeping them afloat. But with those benefits due to expire at the end of the month, many Delawareans who still cannot return to work are wondering how they will go on.

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Why won’t Delaware help small businesses?

A Better Delaware has consistently spoken out against poor leadership regarding economy and business in Delaware during the COVID-19 pandemic. We were not the only ones. The Delaware State Chamber of Commerce, the Central Delaware Chamber of Commerce, the Delaware Small Business Chamber of Commerce, the Delaware Prosperity Partnership, legislators, and business owners and leaders have all called for more attention to this critical issue Delaware faces.

When the Chambers and DPP offered to help, little was done. When industry leaders begged for help, state leaders told them that they were not the priority—only health was. While the health-related efforts here were commendable and necessary (Delaware currently has the 13th highest per capita case count in the nation), we firmly believe that saving lives and saving livelihoods goes hand-in-hand.

On April 13, three weeks after the mandatory stay at home order issued by Governor Carney, and after much outcry from the business community for a lack of attention, Delaware entered a multi-state task force to address reopening with New York, New Jersey, Connecticut, Rhode Island, Massachusetts, and Pennsylvania.

As if Delaware leadership was controlling the task force itself, transparency has been missing from the efforts of the task force. At the time of publication, we could not locate a website or report for the Covid-19 Regional Advisory Council. What we do know is that New York and New Jersey have recently turned their backs on Delaware despite the alliance.

On June 1, perhaps after realizing the futility of this partnership, Delaware announced its own entity that would, through a subcommittee, address business issues related to COVID-19. It took 69 days, a weak regional effort, and continued pressure from various stakeholders to finally establish Delaware’s Pandemic Resurgence Advisory Committee.

So far, the committee itself has taken little action, despite meeting twice a month and having supplemental weekly subcommittee meetings. The Business Subcommittee has met several times, and the most they have accomplished is asking for data on the impact of COVID-19 on Delaware’s agriculture industry and requesting better communication and more transparency (sound familiar?).

Frankly, Delaware’s efforts to help its own businesses have been next to nonexistent, spare the H.E.L.P. loans that are only available to the hospitality industry. It’s not that we can’t afford to help our small and family-owned businesses: we just gave $2.5M to a British bank that only a year ago took 500 jobs out of Delaware, and the state also received close to $900M in CARES Act funding that has yet to be allocated. We have simply chosen not to help.

Delaware can and mustdo better. Below is a list of what other states have done to help their small businesses, and shows what could be done for our own in the First State.

Arkansas: $7M for zero-interest loans from Arkansas’s Quick Action Closing Fund

California: $50M loan guarantee program

Washington DC: $33M Small Business Recovery Microgrants program

Florida: $49M for Small Business Emergency Bridge Loan Program

Illinois: $500M Small Business COVID Relief Program, $20M from Community Development Block Grant funds for small business grants, $60M for small business grants

Indiana: $30M for Small Business Restart Fund (funded by CARES Act)

Iowa: Iowa Small Business Relief Fund, Iowa Targeted Small Business Sole Operator Fund

Louisiana: $50M loan guarantee program for small businesses, $300M of CARES for small businesses

Maryland: Emergency Relief Grant Fund for small businesses, Emergency Relief Loan Fund for small businesses

Massachusetts: $10M Small Business Recovery Loan Fund, Empowerment Grant for Small Businesses

Michigan: Michigan Small Business Relief Program, $100M of CARES Act funding for Michigan Small Business Restart Program

Minnesota: Small Business Emergency Loans (interest free), $62.5M in CARES Act funds for a small business grant program

Mississippi: $300M of CARES Act for a grant program for small businesses, with priority for businesses that did not receive federal PPP loans

Montana: Will use some CARES Act funds for business stabilization, deploying funds over an immediate- to mid-term time frame for forgivable loans, and low- or zero-interest loans

New Hampshire: $400M of CARES Act funds for small business grants

New Jersey: $10M for New Jersey Small Business Assistance Loan program, $5M for the New Jersey Small Business Assistant Grant Program, $6M for Small Business Lease – Emergency Assistance Grant Program

New York: $100M for New York Forward Loan Program for small businesses

Pennsylvania: $60M for Working Capital Access Program for small business loans, $225M for micro-business grants

South Dakota: $10.5M for a Small Business Relief Fund

Tennessee: $200M of CARES Act funds for the Tennessee Business Relief Program

Vermont: $400M in CARES Act funds for an economic relief and recovery package

Washington: $10M for the Working Washington Small Business Emergency Grant program

Wisconsin: $75M for a small business assistance grant program

Wyoming: $50 million in grants through the Wyoming Business Interruption Stipend

Delaware ranked poorly in COVID standings

Four months ago, our world changed.

A recent study State Economies Most Exposed to Coronavirus revealed:

  • Delaware ranks 29th overall
  • Delaware ranks 39th for “Highly Affected Industries & Workforce”
  • Delaware ranks 51st overall for “GDP Generated by Highly Affected Industries as Share of Total State GDP”
  • Delaware ranks 46th for “Accommodation and Food Services”
  • Delaware ranks 47th for “Entertainment and Recreation”
  • Delaware ranks 50th for “Retail Trade”
  • Delaware ranks 42nd for “Educational Services”
  • Delaware ranks 51st for “Other Services (except government and government enterprises)”

We may be the First State, but we’re last where it counts.

If we look back at studies released in the past two years, it’s clear that Delaware’s economy and business climate were not suited for the corona-crisis.

A study from WalletHub ranked Delaware as the 7th worst state to start a business and the 2nd worst for small businesses. Delaware’s fiscal stability was 45th in the nation and ranked 44thfor overall fiscal health.

At the start of 2020, before coronavirus, Delaware’s economy was one of nine nationally predicted to shrink over the next six months.

The coronavirus forced people out of work and businesses to close their doors—some forever. At first, the effect of or economy was reminiscent of the Great Recession in 2008.

According to the Federal Reserve Bank of Philadelphia, Delaware’s business conditions recovered from the Great Recession at a noticeably slower pace than the rest of the nation, taking three more years to stabilize than the average.

This would mean that a return to our dismal economic position isn’t likely until at least 2023. Unfortunately, it is now clear that the economic impact of COVID-19 is worse than 2008.

What will that mean for Delaware moving forward from this crisis?

First, we hope that this will push Delaware to be more focused on the small and family-owned businesses right here in the state. Instead of being used to play a losing game of corporate welfare, taxpayer dollars could help the businesses in their own communities.

The COVID-19 pandemic should lead to wiser saving and spending habits from our state leaders in the future. During the next legislative session beginning in January 2021, A Better Delaware is looking for more serious consideration and evaluation regarding funding, programs, and expenses, as well as a codified savings plan.

If we use this as a much needed wake up call, we have the chance to truly make Delaware better in the future.

Commentary: Transparency issues would accompany Wesley-DSU merger

From Delaware State News

By Rep. John Kowalko

The imminent merger/acquisition of Wesley College, a private college, by Delaware State University, a public university, has once again brought into focus the determined effort by our state government to resist the transparency and openness necessary to allow public awareness and accountability. Delaware has historically ranked near the bottom for its lack of transparency and accountability.

Delaware’s shaky financial disclosure and ethics system is one big reason why the state earned a failing grade on the State Integrity Investigation, an assessment of state government accountability and transparency by the Center for Public Integrity and Global Integrity.

A report released in November 2015 shows that Delaware received a 56, or grade of F, ranking it 48th among all states. See the report here: publicintegrity.org/politics/state-politics/state-integrity-investigation/delaware-gets-f-grade-in-2015-state-integrity-investigation/.

In assessing the systems in place to deter corruption in state government, some of the categories that Delaware failed in were public access to information (grade F, rank 24th), political financing (grade F, rank 27th), executive accountability (grade F, rank 36th), legislative accountability (grade F, rank 48th), state budget process (grade D, rank 42nd) and ethics enforcement agencies (grade F, rank 43rd). These statistics do not present a very flattering picture of the “Delaware Way.”

Recent examples of Delaware’s embracement of government secrecy and lack of public accountability abound.

Gov. John Carney, the Department of Health and Human Services and the Division of Public Health have refused to release or post data as to the specific locations of coronavirus outbreaks, despite repeated requests by myself and other legislators. This information would be invaluable as we reopen child care centers and plan to reopen schools.

Delaware’s State Department has failed to require identification of beneficial ownership as regards nearly 1 million Limited Liability Company licenses issued yearly, and the Legislature has failed to pass legislation to require oversight that would be in the public’s interests.

The recent case involving the closed-door negotiations between the governor and the Wilmington business community that resulted in the dismantling of the Rodney Square bus terminal and the secretive bidding process and awarding of contracts for construction and management of the new Wilmington Bus Hub exemplifies an unwillingness to allow public access or scrutiny to major policy decisions. Repeated Freedom of Information Act requests on the particulars were rejected.

We’ve witnessed the abuse of the “epilogue language” process in the recently passed budget bill that allows select schools to keep money specifically allocated by law for student transportation expenses. Although existing state law requires that the money not used for transportation expenses be returned to the taxpayers, the epilogue language inserted into the budget bill contravenes existing code, and my amendment to remove it failed on the House floor.

Delaware’s Legislature created the Delaware Partnership for Prosperity, a public/private entity that recommends disbursement of tens of millions of taxpayer dollars to some of the richest corporations in America. Some recent recipients of note were Amazon Inc. and Barclays banks. Despite written FOIA requests by me for details, the DPP has claimed it is exempt from FOIA rules, even those submitted by a sitting lawmaker on behalf of his constituency.

These continued abuses of the public trust have cemented Delaware’s reputation as a secretive operation that feels it has no responsibility or obligation to the taxpaying public that it is sworn to represent.

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“A hell of an expensive lesson picking winners and losers”

Corporate welfare, or financial assistance from government to private businesses, has long been a game that is played in Delaware economic development. Unfortunately, this is a game that the state struggles to win.

Perhaps the most notable failure was Fisker Automotive, an California hybrid electric car company that received $21.5M in 2009. The deal, announced by Gov. Jack Markell and Vice President Biden, was intended to bring around 2,500 green jobs to the state. As time went on, the state had to cover utilities for the flailing company, and it was clear the deal had been a mistake.

Fisker never made a single car in Delaware.

Determined to continue giving away money, the state passed a bill in 2011 that put Delaware on the hook to energy company Bloom Energy until 2032. Part of this deal was a $12M grant given in 2012, on top of nearly $130 million in energy surcharges paid be Delawareans in the first 5 years alone.

Dan Simmons, former vice president of policy at the Institute for Energy Research, believed Delaware’s deal was unusual:

“Bloom was given a whole bunch of incentives and the surcharge, which is very strange. It looks like Delaware was doing everything it could to give Bloom money.”

But for the First State, aggressive incentives for major businesses is par for the course. In 2017, when the company was forced to repay the state $1.5M for failing to meet the proposed goals of the grants, legislators called the deal an “economic disaster” and “a hell of an expensive lesson picking winners and losers.”

That lesson faded quickly from memory.

Solenis,Amazon, and many more were given taxpayer dollars from Delaware’s Strategic Fund after it was clear that the massive Bloom deal was bust in 2017. Most recently, the state awarded $2.5M to British bank Barclay’s to bring 323 call center jobs into Delaware.

The kicker? This is only a year after the company moved 500 jobs out of Delaware into New Jersey, and 3 years since Barclay’s initially took 200 jobs from the state by closing another call center in Newark.

This announcement came as many businesses within the state are still awaiting help related to COVID-19, and some are forced to close their doors permanently. It’s a slap in the face.

While the state’s history of sweetheart-deals-gone-bad is enough to question the practice, since 1997, Delaware has given almost $500M in taxpayer dollars for business subsidies and grants, despite evidence showing that the main factors in a business’ decision to locate or expand in a state are the state’s business climate, tax codes, regulatory structure, labor force and education systems.

A Better Delaware would tend to these factors instead of continuously blowing money bribing companies to pick our state, only to under-perform or up and leave shortly after. Fixing these issues would improve the state overall, and use taxpayer dollars to help the taxpayers, as well as economic development.

GE Aviation to lay off nearly 200 in Newark

From Delaware Business Times

NEWARK – GE Aviation is laying off nearly its entire workforce in Delaware as it copes with a devastating drop in airline travel amid the COVID-19 pandemic, the company reported.

A subsidiary of the conglomerate giant General Electric, GE Aviation is one of the world’s largest manufacturers of commercial airplane engines for companies like Boeing and Airbus. Its Newark plant, located at 400 Bellevue Road, employs around 200 workers, who build advanced aircraft engine components made of ceramic matrix composites (CMCs).

On June 29, the company notified the state that it intended to permanently lay off 194 workers in Newark. A company spokesman told Delaware Business Times that the layoffs will be implemented in a few phases, with most occurring in July and continuing to the end of 2020.

“These actions are consistent with previously-announced plans to reduce our workforce and consolidate operations due to the unprecedented impact of COVID-19 on the commercial aviation industry,” said Richard Gorham, spokesman for GE Aviation. “We appreciate the commitment of all our employees during this difficult time, and we regret having to take this action. We remain focused on protecting the safety of our employees, continuing to serve our customers, and preserving our capability to respond as the industry recovers.”

Despite laying off nearly all of the plant’s employees, Gorham said that GE Aviation does not plan on closing the facility. A small number of production staff will remain in Newark in order to fulfill the terms of military contracts that GE has secured, Gorham said.

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Question marks hang over Delmarva economy

From Delaware State News

This chart from Opportunity Insights Economic Tracker (https://tracktherecovery.org) shows the drop in spending in Delaware and its three counties. Sussex County has seen the slowest recovery. The data is drawn from private companies – from credit card processors to payroll firms – to provide a real-time picture of consumer spending.

DOVER — After three-and-a-half months, it is readily evident that the pandemic has hurt local businesses in a big way.

But, according to a Delmarva economy expert from Salisbury University, it is too early to assess their fates.

“There are so many unknowns that are holding question marks over us, in terms of which businesses are going to be harmed in what ways,” said Memo Diriker.

“What we do know is that a certain percentage — a significant percentage of businesses — are going to find it very difficult to be in business this time next year.”

Consumers were starting to spend a little more freely once restrictions eased, but will that curtail greatly again as cases and concerns about COVID-19 rise?

Can businesses pivot to a model that better relates to contactless service?

Can businesses hold on with the help of government stimuli, such as the Paycheck Protection Program?

What if a second wave of the coronavirus arrives with flu season?

“What we’re seeing, really, is that this is the weirdest ‘dominos falling’ scenario,” said Dr. Diriker. “Some of the things will happen almost in slow motion.

“There have been some businesses that were operating at the edge of profitability, or at the edge of sustainability, and those are the ones that are currently most vulnerable — PPP or not.”

Consumer spending

Dr. Diriker is director of the Business, Economic, and Community Outreach Network (BEACON) at the Franklin P. Perdue School of Business at Salisbury University.

One of his immediate gauges of Delmarva’s economy is actual sales.

“The most important thing is consumer spending power,” said Dr. Diriker. “In the state of Maryland, sales tax revenues are dipping compared to the previous year of the same period.

“That’s a warning sign.”

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