The COVID-19 (coronavirus) epidemic has changed the day to day for many across the globe. Grocery stores struggle to keep essentials stocked, employers are mandating work-from-home policies, and health care systems are feeling a strain from testing and treatment.
Over the past week, many businesses in Delaware and nationwide have been forced to reduce service or even close their doors. Workers are concerned about lost wages, and business owners are facing massive revenue shortfalls.
Both are concerned about their ability to pay bills.
New cases are cropping up every day in the First State, and things will only get worse. Businesses will need help that comes from both the community and the state, and that help should not come at the expense of others struggling at this time: taxpayers.
The U.S. Chamber of Commerce has released “Resources to Help Your Small Business Survive the Coronavirus,” including some temporary measures lawmakers can take to help business survive the impact such as:
- Waiving fees for businesses with low margins
- Offering no-interest loans for businesses
- Cancelling or deferring payment of payroll taxes
Governor Carney has already taken some steps to help businesses with programs like the Hospitality Emergency Loan Program (HELP). Under HELP, businesses are eligible to receive state support to pay rent, utilities, and other major overhead costs.
The state has also formally requested loans from the U.S. Small business Administration’s Economic Injury Disaster Declaration to help support over 25,000 small businesses in Delaware. Small businesses and non-profits would be eligible for up to $2 million each in low-interest loans.
As for the worker, unemployment must be revisited in a manner that expands eligibility and benefits without adding a burden onto already struggling or inoperable businesses.
There is still no such thing as a free lunch, and as our state’s government works to protect small businesses and workers, the total cost must be monitored closely. Increasing taxes to cover these programs will hurt Delawareans, and so will cutting essential programs to cover loss of revenue.
While a health crisis may be an extreme scenario, it is the perfect example of why our government must watch its spending habits in better times. Luckily, Delaware has a Rainy Day Fund that could be utilized to offset some of the financial burden associated with the critical programs coming from the Governor’s office, but requires a super majority vote from the General Assembly to spend. Additional coverage could come from the reserved monies from budgeting 98% of revenues, or Budget Smoothing. This $100M+ can be spent at the Governor’s discretion. However, our savings account is only so big, taxpayer pockets so deep, and business revenues so sustainable.
As the situation improves, it is imperative that our state leaders move forward with caution in any new spending or programs while revenues recover. Earlier in 2020, a $200 million “surplus” was attempted to be spent on various new spending projects. Now, that $200 million likely does not exist, digging the state into a worse position to help Delaware businesses and workers, and to recover from the impact of the coronavirus.
That revenue was from increasing taxes on Delawareans in recent years. The same can happen again if the state raises taxes to cover spending from the coronavirus, or to fund new, long-term programs deemed necessary because of it.
There won’t be tax cuts or a return of your money—so what will the new “surplus” be used for in five years?
Irresponsible fiscal policy now will likely hurt Delaware residents and businesses in a way that cannot be ignored or excused.
A sound recovery from Coronavirus will be tough job for our state leaders in the coming months, who must consider how to not worsen our already struggling business climate and interstate economic competitiveness in the aftermath.
Let’s have the foresight to implement recovery policies that encourage economic and job growth, a better place for businesses to grow and thrive, and an economy that lifts up Delawareans as a whole.