154
paged,page-template,page-template-page-archive,page-template-page-archive-php,page,page-id-154,paged-7,page-paged-7,stockholm-core-1.0.8,ctct-stockholm,select-child-theme-ver-1.1,select-theme-ver-5.1.5,ajax_fade,page_not_loaded,menu-animation-underline,wpb-js-composer js-comp-ver-6.0.2,vc_responsive

Delaware’s Labor Secretary warns unemployment taxes after COVID-19 could hinder recovery

From WDEL

Delaware Department of Labor Secretary Cerron Cade said Delaware could be providing over $50 million a week in benefits soon, and the bill that will be due afterwards could hurt economic recovery.

Speaking during a Facebook Live Listening Session on Monday, Cade said Delaware has handed out around $30 million in unemployment benefits in each of the past two weeks, and that number could rise as more groups become eligible to file for unemployment during the pandemic.

Cade said they’ve applied for a loan from the federal government to help and also are getting relief from the federal CARES Act.

“The [total] number could be $850 million over the next three months alone. But more realistically, the state’s share of that will probably be a little bit less, in terms of what we’re going to have to figure out and handle, but it’s going to be a big number.”

Whatever the final cost to the state ends up being, Sec. Cade said one issue is going to be refreshing that fund, which could come in the form of higher unemployment taxes as businesses will be trying to land on their feet after some have been hindered or closed for weeks and months.

“If the state and federal government don’t figure out how to address that number across the states–not just in Delaware–you’re going to see a lot of businesses and non-profit organizations struggle to pay unemployment taxes and struggle to hire people as we try to dig out of this hole.”

Read more

University of Delaware faces multimillion-dollar budget shortfall as coronavirus slashes revenue

From The News Journal

Unexpected costs from the switch to online learning, along with revenue losses from closing campus and canceling events, have the University of Delaware figuring out how to overcome a $65 million budget shortfall, UD President Dennis Assanis said in an email Monday.

The economic downturn that has accompanied the coronavirus pandemic has affected universities across the country.

Since closing campus in early March, the school has seen a significant revenue loss after having to refund prorated housing, dining and parking fees. Early in the semester, travel restrictions reduced tuition revenue from international students. Canceled events and athletic programs have cut off expected revenue streams as well.

Federal stimulus funds, as well as cost-saving measures like closing dorms and academic buildings, have helped push the loss from $65 million to $50 million, said university spokesperson Andrea Boyle.

But in an effort to “tighten our belts,” she said, the university has also rolled out a number of other budgetary measures — namely, a hiring freeze that could impact the university’s approximately 850 adjunct faculty members.

Read more

Will Delaware raise taxes by $200M again?

The Delaware Economic and Financial Advisory Council (DEFAC) released the updated revenue forecast for fiscal year 2020 this week, and the outlook is dim. DEFAC estimates show Delaware’s revenues for FY 2020 down by $416M and FY 2021 revenues down by $273.3M, creating a deficit of about $748.7M, but that may not be the final impact.

The sentiment was clear in Monday’s DEFAC meeting: there are many factors in play impacting financial futures. The shape of the recovery curve, process of reopening, unemployment numbers, business closures, use of federal funds, and endless more items can impact the ability to recover from COVID-19. Governor Carney expects as much as $500M to $1B in lost revenues.

For Delaware, the worries don’t stop there. A Federal Reserve Bank of Philadelphia index report predicted Delaware to be one of 9 states with an economy predicted to shrink in the first half of 2020. Delaware also ranks 45thin the nation for short-term fiscal stability, which is bad news for budgeting legislators and struggling businesses and residents.

Before the pandemic, Delaware saw unemployment rise for six months straight and above the national average and was 34thfor employment. Now, more than 71,000 Delawareans have filed for unemployment since the pandemic began, as businesses shut down or laid off workers.

Unfortunately, instead of meeting to make difficult decisions to cut current spending or tap into reserves, our leaders decided to wait for a Hail Mary from federal funding. These funds cannot be used to offset lost revenue, and Delaware’s leaders are scrambling.

Lawmakers faced a similar struggle in 2017, when Delaware’s deficit was close to $400M. Later, in 2018, Governor Carney said:

“We are presenting a balanced, long-term solution to Delaware’s structural budget challenges that will keep Delaware economically competitive. This proposal requires shared sacrifice – and that starts with a commitment by state government to operate more efficiently and spend taxpayer dollars wisely…”

Despite this claim, spending cuts and sacrifices were temporary. The real sacrifice came from Delawareans who saw new and higher taxes totaling $200M in new annual revenue.

When Delaware recovered, the taxes remained and the new “surplus” became an excuse to continue spending.

Now that Delaware faces a deficit that is double what we saw in 2017, Office of Management and Budget Director Mike Jackson says that postponing planned capital projects and accessing reserves may be part of the answer, however, “All options are going to be on the table.”

This signals that the response may resemble 2017, and Delawareans could foot the bill through higher taxes.

In 2017, it was only the state government in crisis. Now, it is every Delawarean.

Taxes should not have been the answer in 2017, and cannot be the answer in 2020. We cannot ask more from those who have already been forced to close their businesses, who have been laid off work, and who cannot afford to answer for the consequences of poor financial planning and action from state officials.

Cutting the $233M in recently proposed one-time capital expenditures, utilizing the $252.4M in Rainy Day Funds and $126.3M in Budget Stabilization Funds, reallocating the tens of millions in the Strategic Fund, freezing agency budgets, suspending budget increases, and a critical look at our spending habits are the key to our recovery.

We have the ability to afford this pandemic without increasing taxes.

The question is: will we?

How will local leaders across Delaware respond to big budget gaps in wake of coronavirus?

From The News Journal

The effects of a coronavirus-driven economic crisis that is causing more than a half-billion-dollar hit to the state’s revenues will surely soon be felt in the pocketbooks of cities across Delaware, local officials said.

From lost parking revenue at Rehoboth Beach to utility payments that will never come from now-empty Newark college apartments, city, county and town leaders will face the possibility of cutting services or even the salaries of city workers.

Some, like New Castle County Executive Matt Meyer, say now is the time to keep people employed and even hire more, whether that means taking on debt or draining rainy day funds.

But others, like Wilmington Mayor Mike Purzycki, aren’t ready to make that jump.

Already in Wilmington, officials are combing through their proposed budgets for the fiscal year that starts July, looking to cut expenses as the likelihood of layoffs looms.

Among the first items on the chopping block are uniforms and equipment for next year’s Fire Department recruits, a chunk of the Police Department’s 20 planned new security cameras, college scholarships awarded by the Mayor’s Office and the grants of a few thousand dollars that it gives annually to sustain community nonprofits, officials said during ongoing budget hearings before the City Council this month.

“There’s a possibility that it’s going to impact everybody,” Purzycki said.

Read more

Carney outlines criteria Delaware needs to meet to reopen economy

From Delaware State News

DOVER – Widespread testing, along with a decline in the number of new coronavirus cases, will be needed for Delaware’s economy to gradually reopen.

Delaware Gov. John Carney said Tuesday that the state is following the guidance of the White House task force document “Opening Up America Again.”

That guidance has three phases, along with gating criteria to meet before beginning each phase.

The first check box is a decline in cases.

Delaware’s number of new cases, by day, had been dropping. However, there is some flaws in the timeliness of test returns that has to be considered.

“You can see on this bar chart that we are on a downward decline,” said the governor during his Tuesday press briefing.

The chart showed 248 cases on Friday, 215 on Saturday, 207 on Sunday and 186 on Monday.

The Delaware Division of Public Health reported 269 new cases for Tuesday. How the state will apply the case numbers in a trend is problematic because of the way results are reported.

“To get to the starting line, you need 14 days of declining cases,” said Gov. Carney. “We do have to factor in the fact that the test results we get back kind of aren’t even and consistent. So we might have to correct for that in our day-to-day analysis.”

Test results have taken anywhere from a few days to two weeks to come back, he said. The exception is that the state lab results arrive in 24 hours.

Another important part of the criteria is hospital capacity, and so far Delaware’s hospitals have been able to handle the demands of the coronavirus.

Additionally, Delaware will need widespread testing that allows public health to have a “rigorous contact tracking system,” the governor said.

Read more

Revenue losses could mean budget cuts, Delaware seeks more leeway from federal government

From The News Journal

Delaware’s state revenue forecast continues to plummet, and officials warn that they could have to make cuts to government programs if they can’t more freely spend the federal aid they received from Congress to fight the pandemic.

The state expects a $784.5 million decline in revenue over the next two fiscal years, based on the latest estimates reported on Monday by the Delaware Economic and Financial Advisory Council.

Much of that money had already been squared away in the governor’s spending plan for next fiscal year, which officials now expect to drastically rework.

The latest forecast could get more or less grim before the state finishes out this fiscal year. Lawmakers, who postponed the legislative session indefinitely in mid-March, have to pass a budget for the next fiscal year by June 30.

The forecast includes a $150 million hole in the budget that officials will have to find a way to fill before the end of this fiscal year, said Office of Management and Budget Director Mike Jackson. The state could dip into its reserves or postpone capital projects that haven’t started yet, he said.

“But if it gets worse, our measures will be stronger,” Jackson said, without offering specifics.

In Pennsylvania, about 9,000 state workers stopped getting paychecks earlier this month after their offices were closed amid the pandemic.

“All options are going to be on the table,” said Jackson, adding that Delaware is in a better financial position than other states because of its reserves. “What they (other states) may employ as a strategy to cope with fiscal challenges, we may not employ.”

When asked about potential pay cuts in Delaware, Carney said during a Tuesday press conference, “Our focus will be on protecting our state employees. … But we’re going to have to take whatever measures are necessary, obviously, to close the gap.”

Read more

Delaware FY 2020 revenue downgraded by $400M amid crisis

From Delaware Business Times

DOVER – State fiscal analysts released their first look at the coronavirus’s economic impact on Delaware on Monday, when they estimated that the current fiscal year has taken a $416 million hit so far, now leaving a deficit of about $784.5 million in the governor’s nfe

With estimated general fund revenue of about $4.32 billion, the state would face a deficit of $150 million heading into next fiscal year – a stark turn from December when the Delaware Economic and Financial Advisory Council (DEFAC) estimated that the state would enjoy a $246 million surplus at the end of the year.

How that deficit is closed isn’t something that DEFAC, a non-partisan group of business and community leaders, academics, and government professionals that sets the state’s official revenue estimates, is tasked to consider, but the state does have reserve funds in tow for such an emergency. The larger question will be how the state contends with an expected downturn in revenues through next fiscal year, which runs July 1, 2020, to June 30, 2021.

Read more:

https://delawarebusinesstimes.com/news/budget-downgrade/

State House, Senate leaders seek flexibility in using $1.2 billion in federal coronavirus funds

From Delaware Business Now

Delaware State House and Senate leaders from both parties are asking the state’s Congressional Delegation for help in getting more flexibility in using more than $1 billion in federal  coronavirus aid.

The authors of the letter noted that money from the  Coronavirus Aid, Relief and Economic Security (CARES) Act provides $150 billion directly to states, territories, tribes and localities to combat the public health and economic effects of the COVID-19 pandemic.

Delaware is expected to receive approximately $1.25 billion under the omnibus measure. The funds will be transferred to states during the next two weeks.

“The CARES Act provides vital funding, but it restricts the money to unbudgeted expenses related to COVID-19. It cannot be used to address states’ revenue losses. This is far too restrictive for states like Delaware to effectively apply the federal funds. Being able to use these dollars to shore up Delaware’s operating budget is critical to maintaining services and recovering from this unprecedented crisis,” the letter stated.

Read more:

https://delawarebusinessnow.com/2020/04/state-house-senate-leaders-seek-flexibility-in-using-1-2-billion-in-federal-coronavirus-funds/

First State Last in Federal Assistance

This past week, Delaware entered a multi-state task force to develop a plan to reopen schools and businesses in the region, including Pennsylvania, Connecticut, New Jersey, New York, and Rhode Island.

While this seems to be a definitive move in the right direction, we must consider what good this task force can provide after businesses have been shut down or have suffered greatly for a month with little help. Businesses across the state continue to reduce capacity, lay off workers, and shut down after crumbling under the weight of this pandemic.

After all this time without action, this new effort seems to be too little, too late.

For those businesses who grasped for the few lifelines they saw available in the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loans, it really is too late. The $349 billion dollar fund was fully exhausted in two weeks’ time, with Delaware receiving fewer loans and less money than any other state, even states less populated.

With Congress torn on whether to authorize more funding for the PPP, where does that leave Delaware businesses?

For many, these SBA loans were the only hope to pay bills, keep employees, or even remain in business. If a Delaware business does not qualify for the state’s Hospitality Emergency Loan Program (HELP), then they truly are left without help.

Delaware issued a stay at home order on March 22 (in effect on March 24), effectively closing non-essential businesses. Twenty days later, and after offering little help to the businesses forced to shutter, we have joined a regional task force that still offers no help to struggling and failing businesses at this time.

Michigan, a state with over ten times Delaware’s population, established their task force on “general economic impact on the workforce, business activity and supply chains” on March 3, twenty days before issuing a stay at home order.

Other larger states like Ohio, Utah, and Colorado have formed their own task forces to address business needs, economic impact and recovery, and reopening their operations.

Their leaders recognized that saving livelihoods went hand-in-hand with saving lives.

Delaware’s reserves, such as the Rainy Day Fund, Strategic Fund, and money from budget smoothing have yet to be released to help ease the economic impact. Hundreds of millions of dollars in these reserves has been set aside for use in times just like this—especially the Rainy Day Fund which currently totals over $250M.

It isn’t just raining right now—it’s pouring.

Over the past four weeks, nearly 62,000 unemployment claims were filed, almost twice the amount for all of 2019. New businesses are shutting down weekly, with no hope for the future. State revenues are shrinking just as fast as money from the gross receipts tax, realty transfer tax, income tax, and more are not being generated.

Instead of utilizing hundreds of millions of existing taxpayer dollars to help ease the impact of this crisis, leadership has let businesses fail and our economy suffer.

When small businesses started failing and asked for help, they were denied. When entire industries came and begged to be saved, leadership denied them as well. When they come to you, the taxpayer, at the end of this for help with a budget deficit, it will not be a request. It will be higher taxes imposed on a population that is struggling to recover their own finances.

Carney tells nonprofits there may be loss of $500 million to $1 billion in state revenue

From The News Journal

Gov. John Carney told leaders of Delaware’s nonprofits Thursday that with so many businesses closed, the state may lose $500 million to $1 billion in state revenue.

Because of that, he said he can’t be sure what will happen with the state budget.

Carney and Lt. Gov. Bethany Hall-Long fielded questions from nonprofits during a virtual town hall focusing on the effects of the coronavirus pandemic. It was organized by the Delaware Alliance for Nonprofit Advancement.

One of the questions asked was what they could expect in the 2021 budget, particularly as it applies to bond funding and the grants-in-aid that keep many of them afloat.

Carney said that picture is not yet clear. The state normally would be getting a lot of revenue from casinos and other businesses now ordered shut to slow the spread of the coronavirus.

Because of that, there could be $500 million to $1 billion in lost revenue.

He said he hopes the Legislature can come together to create a budget by June 30. He also noted that federal stimulus money cannot be used to make up for that lost revenue.

Read more