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As COVID-19 cases climb at Delaware beaches, businesses struggle to stay staffed, healthy

From the News Journal

This Fourth of July weekend, beaches in coastal destinations like Miami, Fort Lauderdale and Los Angeles County will be closed in an effort to stop beachgoers from spreading the coronavirus among family, friends and strangers there – and when they return home.

But in Delaware, the beaches will remain open – with a lot of new restrictions in place, including for the businesses beachgoers often frequent.

“Over the last couple weeks we have experienced an uptick, a resurgence of COVID-19 cases in the beach areas specifically,” Gov. John Carney said during a press briefing on Tuesday. “We also have witnessed – across our state, but particularly in the beach communities – complacency with respect to mask wearing and social distancing.”

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State passes pared-down FY ’21 budget that axes readiness funds

From Delaware Business Times

DOVER – The Delaware General Assembly completed its work on the fiscal year 2021 budgets over the past week, delivering something that is smaller than what Gov. John Carney proposed in January due to the impact of the COVID-19 pandemic.

Among the cuts imposed on the annual budgets were several initiatives that aimed to speed up Delaware’s ability to provide space for employers.

The governor proposed a record-setting $4.63 billion operating budget and $893 million capital budget appropriation that was ultimately undone by the financial havoc wrought by the COVID-19 pandemic. In the months since the virus spurred widespread shutdowns of state businesses and limited commerce, Delaware has seen a revenue forecast decline of more than $530 million.

Over the last days in June, state lawmakers approved a $4.54 billion operating budget, about 2.1% larger than the last fiscal year due almost entirely to fixed “door opener” cost increases like pensions, debt service and school enrollment funding. Even though it fell short of Carney’s original proposal, the operating budget is still the largest in the state’s history.

Mike Jackson, director of the state’s Office of Management and Budget, described the FY 2021 budget as one where “no one loses, but no one really wins.”

One reason why the budget was able to largely match the FY 2020 appropriation level was that state officials used half of the Budget Stabilization Fund, which was created under Carney’s tenure to plug smaller budgetary gaps through an annual 2% savings program. Lawmakers were able to use only $63.1 million from that fund to offset losses, while also not touching the state’s long-protected “rainy day” Reserve Fund.

“In a year such as this, to be able to continue to maintain that level of discipline, but also fully funding the state’s ‘rainy day’ fund is a pretty remarkable achievement,” Jackson said at a June 30 press conference where Carney also signed the budget bills.

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Commentary: Delaware government must serve and protect public

From the News Journal

By Richard Gebelein and Robert Marshall

As two former Delaware public servants with a combined 75-plus years of experience in Delaware government, spanning the executive, legislative and judicial branches, we are concerned with the state of our state as it faces the challenges of 2020.

Delaware needs to address the effects of the COVID-19 pandemic and the highest number of unemployed people in our history, as well as structural issues in government and taxation. Decisions made this year will significantly alter how Delawareans live in the coming decades. Those decisions should be made through a process that meets both the letter and the spirit of our sunshine laws.

We come from different political parties, and we have different views on many issues. During our public service careers, we have debated those issues. In many cases, compromise was possible, and we could join to support positive change. When we did this, the process was aired publicly in legislative and administrative hearings. The media covered those public hearings, and the process was open. Investigative reporters sought out dissenting views, reported on them and uncovered improprieties where they existed.

Today, Delaware faces unprecedented challenges, and yet, there is little public discussion of the steps to be taken to address these matters. The “People’s Hall,” aka Legislative Hall in Dover, is closed to the public.

As an example of decisions to come, it appears that the governor and one judge have determined that there must be a reassessment of the value of real property for tax purposes. Any reassessment will have serious tax and property value implications for everyone who owns a home, a business property, etc. This reassessment will mostly impact those middle-class families whose biggest asset is their home. Historically, a rise in real estate taxes may be accompanied by a decrease in the actual value of the property.

Just as in the catastrophic real estate collapse of 2008, middle-class homeowners could be forced from their homes. How to conduct a reassessment, limit the size of tax increases and/or seek alternative funding for schools should be publicly debated to allow for input from the public. Many of these impacted homeowners have been negatively affected by COVID-19 already and may not be able to bear a tax increase, as well.

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Delaware Senate passes bond bill, grant-in-aid after coronavirus forces last-minute cuts

From the News Journal

The Delaware Senate on Thursday unanimously approved hundreds of millions in funding for capital projects and nonprofits across the state for next fiscal year.

The $55 million nonprofit grant-in-aid bill and the $708 million capital bond bill now head to the House, which is scheduled to vote on Tuesday.

The approval comes after the 21-person upper chamber on Tuesday failed to pass both of those bills, which require three-fourths of senators’ approval. Several Republicans refused to vote, saying they wanted more time to review the bills that the General Assembly wants to fully pass by the end of the fiscal year, June 30.

Sen. Nicole Poore, D-New Castle (left), and Sen. Jack Walsh, D-Stanton sit during the Senate Elections, Government and Community Affairs Committee hearing on Jan. 15, 2020.

Lawmakers on Wednesday were able to pass their biggest agenda item: a $4.5 billion operating budget for next fiscal year. The state planned for a $4.6 billion budget and an $893 million bond bill — the biggest in the state’s history — at the start of this year, but both suffered cuts after the state’s revenue forecast dropped by $400 million between December and June. Construction costs and building renovations are delayed, and not all state employees are getting pay raises as originally promised.

The whittled-down bond bill includes millions in cuts to clean water initiatives and business incentives for next fiscal year. Some pools of money, such as $20 million to aid private and public colleges, have been cut entirely for next year.

Dover resident Thomas Moore walks in front of Legislative Hall at the Delaware State Capitol, which sit quiet on Monday, March 30 amid the coronavirus pandemic.

The state meanwhile is relying on a hefty aid package from the federal government to pay for costs related to the coronavirus pandemic, such as testing and benefits to masses of unemployed Delawareans. Lawmakers returned to work via Zoom video conferencing in late May after a two-month hiatus due to the coronavirus pandemic, which shut down Legislative Hall.

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Weakened trust and weaker growth

The COVID-19 pandemic has placed a massive spotlight on our local and state governments’ operations and spending; today, transparency isn’t just warranted, it’s demanded.

In the waning weeks of Delaware’s legislative session, it is clear that even a pandemic can’t push our officials to hold themselves accountable or be transparent with their constituents. Promises and trust have been broken, but that’s just business as usual here.

Transparency and the resulting ability to hold elected officials accountable have long been major issues in Delaware government with implications that span policy, spending, and public faith in government, but access should be easier than ever with virtual meetings and digital communication.

Delawareans were teased with the promise change in January this year, when Delaware General Assembly leaders Sen. McBride and Rep. Schwartzkopf announced a new rule that made June 10, 2020 the last day that House or Senate committees could consider bills that originate in their respective chambers.

In May, Rep. Schwartzkopf doubled-down on the promise, by asserting the General Assembly would “concentrate on the money bills,” and that anything beyond would need to be refiled in the start of the next legislative session in January 2021.

Legislators quickly went back on their word when session resumed virtually.

Since the June 10 filing deadline, over 35 bills have been filed that would violate the deadline rule announced in January. While some deal with COVID-19, criminal justice reform, or one of the three budgets, many are outside of the parameters of COVID or “emergency.”

The purpose of the rule was to encourage public involvement and prevent bills from being rushed through at the end of session. Despite this, multiple consent agendas are heard per session day and bills are being pushed under suspended rules to be heard and voted on without a hearing or public comment.

Even the capital budget was brought for a vote in the Senate without adequate time for lawmakers to review the content and vote, let alone the public.

After 22 modifications to the emergency order from the Governor that included shuttering businesses without explanation on what deemed an operation to be “essential” or “non-essential,” lack of input from business leaders on recovery, and delayed announcement on the plan for close to $1B in federal CARES Act money coming to Delaware, the lack of communication is at a tipping point.

Evidence shows that government secrecy can lead to a lack of accountability and abuse of power, and when a local government isn’t forthcoming, it weakens the trust between the officials and their constituents.

Weakened public trust in government can lead to citizens and businesses becoming more risk-averse and delaying investment, innovation and employment decisions that impact economic growth and development. Establishing and focusing on transparency is an investment in economic recovery the future of the state.

This concept may seem lost on Delaware leaders, but it was a major factor in the June 10 deadline.

“The public isn’t fully aware of what we’re doing,’ President Pro Tempore, Senator David McBride said. ‘It’s not that we’re trying to do it without their knowledge. It’s just that things come up.”

Delawareans understand having to deal with unexpected issues, like COVID-19. What we don’t understand is the inability to communicate legislative measures that impact the state’s residents and businesses in the digital age, the reluctance for legislators to hold themselves accountable, or the continued dedication to keeping the state in the dark.

Keep yourself informed throughout the remainder of session (June 30) by checking new legislation here.

Tell your legislator to stick to the rule and stop rushing bills through at the end of session here.

Delaware House passes $4.5 billion budget; other big money bills still being debated

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Are Black-owned businesses in Delaware being left behind?

Over the past few months, coronavirus and social justice demonstrations have highlighted the issues and disparities impacting black communities in health, criminal justice, and much more.

One area that should also be addressed is the inequality in business.

Just a few months ago, the requirements for the Payroll Protection Program (PPP) loans from the U.S. Small Business Association made it difficult for many to receive loans, but it was especially tough for minority-owned businesses. Combine that with the fact that Delaware was second to last in the nation in the first round of PPP loans issued, and Delaware’s black-owned businesses were left in the dust during the pandemic.

Coronavirus only worsened the landscape—it didn’t create it.

According to 2019 Census data, there are about 224,000 African Americans in Delaware, but only 553 black-owned businesses. The First State ranks 33rd in the nation for black owned business success.

Part of the issue is a lack of resources.

According to Guidant Financial, a lack of capital and cash flow is the biggest challenge for black small business owners. While those are the same problems most small business owners face, fewer African-American small businesses are approved for financing, and when they are, it is often for less money and with higher interest rates.

Delaware’s business resource page only lists one option specifically for black-owned businesses: the African American Chamber of Commerce. The AACC is actually regional and operates out of Philadelphia, serving Delaware, Pennsylvania, and New Jersey. Who in Delaware is fighting for Delaware’s black business owners?

Currently, only community level groups offer any support.

Among other issues, high business taxes and long wait times for permit approvals make it difficult for any entrepreneur to make it in Delaware. Add on the additional barriers for African Americans, and the cause of our low success rate for black-owned businesses becomes clear.

Better resources and advocacy for all businesses undoubtedly serves minority owned businesses as well. Lower business taxes, less regulations, and faster approvals from less bureaucracy would strengthen our business climate across the board.

However, when we have a group that clearly falls behind in the state and in the nation in their success, perhaps we should take the time to focus on their specific needs. Sure, helping all businesses is a step in the right direction for a lot of entities, and we at A Better Delaware have been advocating for that.

It is time to take steps to advocate and work for those who we have let fall further behind. It is time for Delaware to do better for its businesses—especially its black owned businesses.

If you are a minority business owner or entrepreneur, we want to hear from you. It is time someone asked what could be done so that our elected officials and communities could better serve those gaps.

Please email info@abetterdelaware.org to help us in the effort to create A Better Delaware for everyone.

Corona impact: Delaware’s restaurants third hardest hit in the nation

From Town Square Delaware

Delaware’s restaurant industry has been one of the hardest hit in the nation and is projected to suffer significant losses for the next six months.

According to newly-released national labor data, more restaurant jobs have been lost in Delaware than any other state in the country except New York and Vermont amid the Covid-19 shutdowns.

“Can you even imagine? This is a dire situation for our local restaurants,” said Delaware Restaurant Association President and CEO Carrie Leishman.

The National Restaurant Association data comes from the Bureau of Labor Statistics. Their report says that Delaware lost 66% of its eating and drinking place jobs between February and April, and it ranks Delaware third in the country for losses.

Delaware’s restaurant trade association group also says the financial impact has also been devastating. Between March 15 and June 15, Delaware lost $472 million in annual restaurant sales, according to the Delaware Restaurant Association. And the trend continues as some restaurants remain closed and others are operating well below capacity.

A driving force in Delaware’s economy, restaurants have lost nearly three times more jobs than any other industry due to the pandemic.

“It’s really a sting. It goes to show you the value and impact that restaurant jobs have on the state of Delaware’s economy,” says Leishman. There are about 1,900 restaurants in the state.

This comes at a time when Delaware usually boasts the third-highest (by percentage) increase in summer jobs, according to the DRA, because of the large numbers of beachgoers and seasonal tourism throughout the state.

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Committee approves capital bond bill totaling $708 million, down 18% from this year

From Delaware State News

DOVER — Lawmakers completed drafting the capital bond bill Thursday, setting it up to be voted on by the full General Assembly next week. The committee approved a $708 million spending plan for the fiscal year beginning July 1.

That total represents a decline of about $155 million (18%) from the current fiscal year and $185 million (21%) from the governor’s January proposal, a precipitous decrease that can be clearly backed to the COVID-19 outbreak.

With coronavirus triggering a big economic hit and preventing the legislature from meeting at all for months, lawmakers were pressed to approve spending plans for the operating and capital budgets by their deadline at the end of this month.

The Joint Committee on Capital Improvement, one of two money committees that handles the annual spending bills, did the latter Thursday by passing a modified bill that closes the gap with cuts to various areas. The cuts themselves were identified beforehand by budget officials in consultation with the committee co-chairs and some others.

The bond bill, which still must be passed by both chambers by July 1, includes $364 million for transportation-related items and $344 million for other needs, such as state facilities.

The $893 million sum proposed by the governor would have been the largest bond bill in state history, surpassing the $863 million total allocated in the current fiscal year.

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Record unemployment rate in Delaware gets even higher

From Delaware State News

DOVER — Delaware’s April unemployment rate shattered the old record. Its mark for May is even higher.

The state’s unemployment rate climbed 14.9% to 15.8% from April to May, an indication of just how far from over the COVID crisis is. Nearly one in six Delaware workers did not have a job last month, according to the data.

Out of the estimated civilian labor force of almost 473,000 Delawareans, about 75,000 were not employed in May, according to data from the Delaware Department of Labor and U.S. Bureau of Labor Statistics.

The unemployment rate rose from 3.9% in February to 5.1% in March, the largest month-to-month increase since September 1990, before April’s astronomical climb.

Delaware’s first coronavirus case was announced March 11, and businesses were under serious restrictions by the end of the month, while residents were urged to remain at home.

Nationally, the unemployment rate actually fell in May, declining from 14.7% to 13.3%. Still, 13.3% is the highest the rate has been since the Great Depression, and the Federal Reserve this month predicted unemployment will be around 9% at the end of the year.

For comparison, the unemployment rates for May 2019 were 3.6% nationally and 3.7% locally.

Delaware’s unemployment record before COVID was 9.8%, set in 1976, the first year job records for the state are available. During the Great Recession, the First State’s nadir was 8.8%.

The May unemployment rates for New Castle, Kent and Sussex counties, respectively, are 14.9%, 17% and 16%. However, unlike the state rate, the county figures are not seasonally adjusted.

Over the past 12 months, Delaware has lost almost 73,000 jobs, with about 41% of the losses in leisure and hospitality.

The state has seen in excess of 100,000 unemployment claims in three months, more than triple the number from all of 2019.

Delaware is currently in the second phase of its three-part “rolling” economic recovery. There’s no timetable for when the next step will begin.

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