/* */ /* Mailchimp integration */
149
page-template,page-template-blog-large-image-whole-post,page-template-blog-large-image-whole-post-php,page,page-id-149,stockholm-core-1.0.8,select-child-theme-ver-1.1,select-theme-ver-5.1.5,ajax_fade,page_not_loaded,menu-animation-underline,smooth_scroll,header_top_hide_on_mobile,wpb-js-composer js-comp-ver-6.0.2,vc_responsive

Blogs and Articles

DE’s Legislative Session: Partisan Rule Leaves Delaware Taxpayers Out!

From: Kathleen Rutherford, Executive Director, A Better Delaware

As America enters a recession and inflation reaches a 40-year high, one might think Delaware would take some of its $1 billion budget surplus to ease the burden on taxpayers and small businesses. If you ask a legislator, they might point to the one-time $300 “relief check” they graciously returned to each Delaware taxpayer. But the reality is, every opportunity the General Assembly had to provide meaningful relief that would incentivize growth and create economic opportunity — they met with inaction. That’s in stark contrast to 24 states which, during the same period of time, enacted lasting tax cuts.

According to the Tax Foundation, ten states enacted individual income tax rate reductions, six states enacted corporate income tax rate reductions, and two states permanently exempted groceries from their respective sales tax bases.

Though meaningful tax relief didn’t happen, there were a few good bills that made it across the finish line. Senate Bill 188, for example, increases the $2,000 pension exclusion otherwise available for military pensioners under age 60 to $12,500, providing an incentive for military retirees under age 60 to locate in Delaware. The bill passed in both chambers and awaits the governor’s signature.

Yet, there were numerous bills that would have helped struggling taxpayers that never saw the light of day. Consider House Bill 358, a bipartisan bill introduced by Rep. Bill Bush, D-Dover, that would have cut the realty transfer tax by 25%. Delaware currently has the highest realty transfer tax in the nation. The realty transfer tax is levied on the purchase price of the home and is usually split between the buyer and seller. According to Zillow, the median price of a home sold in Delaware as of June was $356,744. Had it passed, HB 358 would have reduced the transaction cost for the sale of such a home by more than $3,500 and collectively saved homebuyers an estimated $83 million in its first year. According to the National Association of Realtors, realty transfer taxes are regressive because the tax burden is higher for lower-income households. Additionally, increased closing costs on the transfer of existing residential property are likely to reduce the ability of new and current homebuyers to purchase a home, the association notes. “As a result, these taxes have a negative impact on housing purchases and therefore economic development.” Even if the bill passed, Delaware’s transfer tax would still be higher than most: Only Delaware, the District of Columbia, New Hampshire, New York, Washington, and Pennsylvania, have transfer taxes above 1%. Unfortunately, the bill was assigned to the House Revenue & Finance Committee where it never received a hearing.

House Bill 191 would have cut each personal income tax bracket by 10%. The bill was assigned to the House Revenue & Finance Committee in May 2021 and never received a hearing. The bill would have also cut the corporate tax rate from 8.7% to 6.1%. At the same time, West Virginia’s House of Representatives passed a bill to cut each income tax bracket by 10%.

House Bill 445 would have cut Delaware’s gross receipts tax by 50%. Gross receipts taxes are viewed as some of the most economically damaging, as they are assessed at each stage of a supply chain rather than at the final point of sale. This leads to tax pyramiding, which causes prices to rise as the cost of taxes is often shifted to the consumer. Reducing the gross receipts tax would have allowed small businesses to be more competitive and created a tax environment that benefits both businesses and consumers. Some refer to the gross receipts tax as “Delaware’s hidden sales tax” because it is applied to the business rather than the consumer. Inevitably, though, that cost is passed on to the consumer. 45 states have repealed the gross receipts tax.

Charlie Copeland, director of Caesar Rodney Institute’s Center for Analysis of Delaware’s Economy & Government Spending, writes, “In short, during bad economic times, Delaware’s hidden sales tax, [also known as] the gross receipts tax, ensures that Delaware small business owners pay among the highest personal income tax rates in the nation – taking money out of the business at the exact moment the business most needs that money.”

The bill was assigned to the House Revenue & Finance Committee where it never received a hearing.

With the state consistently bringing in hundreds of millions in surplus funds, now is the time to give taxpayers the chance to thrive, not to burden them with additional economic baggage.

Most importantly, voters must look beyond the $300 checks and realize how much of their hard-earned money Delaware’s government is keeping — not giving back — and keep that in mind in the upcoming elections.

Community Workforce Act: Opportunity for All?

From: Kathleen Rutherford, Executive Director, A Better Delaware

Recently HB 435 was introduced in the Delaware House of Representatives. Otherwise known as Community Workforce Act, this bill would require that all state funded construction projects totaling over $3 million must be completed by union only project labor agreements. This decision would have disastrous consequences to Delaware’s economy. Currently, over 80% of construction work inside the state is done using non-union contractors. Taking away their ability to bid on high-cost projects would diminish competition in the bidding process and potentially lead to less-than-ideal results. Non-union employees should have an equal opportunity to complete state funded construction projects, otherwise contracts may not be awarded to the people who will perform the best work at the best price.

The bill claims that allowing these large public works construction projects to be governed by a Community Workforce Agreement with labor organizations would “provide structure and stability and promote efficient completion.” A New Jersey DOL study recently found that the cost of PLA projects was 30.5% higher per square foot than non-PLA projects. This same study also demonstrated that PLA projects take an average of 23% longer to complete than non-PLA projects. It comes as no surprise that placing limiters on the labor market leads to diminished results. Delaware is no stranger to construction projects running over budget and over the expected time constraints, but this would only exacerbate the issue. The recent Federal Bipartisan Infrastructure Law (championed by Tom Carper, Chris Coons, and Lisa Blunt Rochester) would give Delaware $48.5 million over a five-year period to address at-risk coastal infrastructure. Allowing this work to only be performed by union contractors would hinder these infrastructure projects.

One key way that states have prohibited this is by enacting bills to prohibit government-mandated PLA’s. Florida passed HB 599 in 2017, which required that construction projects that are projected to cost more than $200,000 must be competitively bid on. It also prohibits local governments from imposing discriminatory pre-bid mandates onto contractors when the project they are working on receives more than 50% of its funding from the state. Bills like this attempt to mitigate the  excessive costs and lower quality that unnecessary government mandates have on public construction projects. Wisconsin took a similar approach to the issue by signing SB 3 into law. This bill prohibits the government from mandating PLAs on state or local construction projects. The difference between this bill and HB 599 is that it still allows contractors to use PLAs with unions if they are operating outside of the governments method of ensuring fair competition. The goal of this bill was to create a fair and level playing field for publicly funded construction contracts by increasing competition and helping smaller businesses.

To keep Delaware on the right path to economic prosperity, it is essential to prevent barriers like HB 435 from hindering competition between contractors. With projects like these being funded by taxpayers, it is important to make sure that the best possible contractor receives the contract after they have demonstrated the ability to perform the job at the lowest cost and shortest timeframe. Contractors should have an equal opportunity to work on state funded construction projects regardless of their decision to affiliate with a union or not. It is the responsibility of the state government to be fiscally responsible and avoid showing any signs of favoritism to union contractors by mandating PLAs.

Infrastructure Investments in Delaware, Let’s Make it Count!

From: Kathleen Rutherford, Executive Director, A Better Delaware

To quote one of the most famous rappers in popular culture, when it comes to the incoming and massive federal infrastructure funding, “You only get one shot, do not miss your chance…this opportunity comes once in a lifetime.”  Delaware: We have only one chance to get this right and we have every ability to do so. The state is set to receive a minimum of $2 billion in funding for roads, bridges, public transit, electrifying the transportation system, airports, water, and other infrastructure over the next five years. As we determine how best to allocate these funds, we must think differently, and we cannot rely on the same state and local agency-led project prioritization and delivery processes that have been used in the past. Those processes do not prioritize the leveraging of private funding, nor do they weigh heavily enough the importance of economic development. This is not meant to minimize the efforts of state agencies like the Department of Natural Resources and Environmental Control or the Department of Transportation as they do have prioritization processes in place, but those processes are not broad enough and have been utilized to make the most from extremely limited resources. With $2 billion in resources, Delaware’s agencies must be more forward-thinking.

Other states are thinking big and outside the box, and we should as well. For example, California has said it will use its funds to address the top public needs associated with climate change and wildfires. This is outside of their normal project prioritization process and has been deemed a priority. We can also look to West Virginia, where they have determined they will use some funding specifically for rural programming to connect Interstate 79 to Interstate 81 — a project which has been planned for over a half-century. West Virginia has also indicated they will use some funds to address the cleanup of toxins from abandoned mines at an estimated cost of $11 billion over 15 years. On the Gulf Coast, Louisiana officials are looking to fund a high-speed passenger rail system between Baton Rouge and New Orleans — a project that has been studied for decades. Florida has allocated hundreds of millions for rural communities to improve infrastructure while simultaneously expanding the local workforce. Funds from that program are designed to encourage job creation, capital investment and the strengthening and diversification of rural economies by promoting tourism, trade, and economic development. Florida is also dedicating more than a half-billion dollars to resilience efforts to protect the state against rising seas, stronger storms, and flooding. These are just a few examples of states that are thinking big with their incoming infrastructure dollars.

Delaware must also think big. We have a tremendous opportunity to bring together the business community with the state and local governments to take a comprehensive look at how we leverage public and private investments to get the most for Delaware’s infrastructure. Delaware could maximize its share by partnering with private firms to incentivize necessary projects. Just think about that for a moment: By partnering with companies that are looking to make their own investments in and around their businesses to expand and grow, Delaware can leverage its funds to create jobs, spur economic development and expedite the timeline for major infrastructure projects. The wonderful thing about this concept is — as a small state with highly productive business-led organizations such as the Delaware Business Roundtable and the state’s 14 chambers of commerce — it would only take some courageous moves from members of the General Assembly and the Governor to create this mechanism.

Infrastructure is not and should not be a partisan issue. Delaware has done a fine job — within its resources — to put mechanisms in place aimed at increasing and spurring economic development. Some examples include the Strategic Fund, Site Readiness Fund, and Transportation Infrastructure Investment Fund. Why not build on those mechanisms? Delaware is presented with a great opportunity — one of the greatest infrastructure investments in its history — and Delawareans must be concerned about our ability to meet the moment with sound policy that benefits everybody. As much as Delaware stands to gain, poor decision-making stands to jeopardize economic and sustainable growth, tens of thousands of jobs, safer communities, the environment, and overall increased quality of life for all Delawareans. We should all want these things for ourselves, our families, and our communities. So, let’s make sure we get this right! Talk with your legislators and make sure they hear you. With the entire General Assembly up for re-election, the temptation to not focus on the big picture is greater than ever. We cannot let that happen. “Look if you had one shot, or one opportunity…would you capture it or just let it slip?”

 

Delaware Bond: It’s Time… to Improve!

 

From: Kathleen Rutherford, Executive Director

The annual Bond Bill process in Delaware is one ripe for re-development. While the Bond Commission is a bi-partisan effort in design it delivers a very basic product which is missing many explanatory details.  Text with strike-through lines, distinguishes between capital projects of last year and those upcoming for next fiscal year. With this setup, the average Delawarean would have to remember the long list of initiatives previously supported to discern which projects are old and which are truly new. What proves necessary here, are clear statistics to show contrasts in funding for groups of items from one year to the next, which MUST be supported with robust legislation to promote greater transparency around the bidding process for Bond-Bill eligible projects.

While Connecticut and Maryland have similar reporting styles for Bond Bills to that of Delaware, the first state’s City of Wilmington adds a heightened focus on quantitative data with their capital budget reporting. Seen in the publicly available budget books, dollars allocated to principal and interest expenses are noted within the context of the year’s total budget. Additionally, spending is shown for each year and tied to each department’s expenses, clearly stating increases and decreases, while also showing percentages attributed to capital projects. Thus, points of contention center around a short list of staggering increases with arguments made for how to spend funds differently.

Another layer of improvement needed for the nation’s first state is the in-the-background process of contractual reporting. With many of the Bond Bill projects the subject of several bids, minimal information is readily available to the public. Did you know that any money put out with the Bond Bill requires the project to use the prevailing wage? So, if a nonprofit needs $50,000 from the Bond Bill to help with a $150,000 project the entire project rated at the prevailing wage is 25% more expensive. What is published, consists of names, projects, amounts, and dates of approval. A thorough performance evaluation to track how long projects take to complete and how much projects are over or under budget would create better accountability and efficiency in spending taxpayer’s money. Furthermore, the screening of contractors must be more transparent, tagging those with direct political connections as such, so that exclusions are made to prevent backroom deals.

On a federal level, the US Senate Committee on Homeland Security and Government Affairs has recently taken this charge to more completely investigate the ties of contractors. In this report, a well-known firm failed to disclose interests in the supporting several pharmaceutical companies and their development of new prescription drugs. With the proper facts established, the consultant’s advice to the FDA should have been thoroughly scrutinized for bias. The new federal bill, a bi-partisan effort recently introduced at the end of March, shows the urgency by which Delaware will benefit from quickly implementing safeguards to additionally protect citizens’ tax dollars spent. And the time is tomorrow and not next year to act, as these inefficiencies which will only continue with each Bond Bill cycle, while capital needs across the state become more dire.

Apprenticeship Ratio Requirements: A Helper or Hinderance in Job Growth?

From: Kathleen Rutherford, Executive Director, A Better Delaware

 As Delaware’s trades rebound from the pandemic and billions of dollars come to the state in federal infrastructure funds, it’s time for lawmakers to free our businesses from the strict regulations that keep them from filling jobs, including apprenticeship ratio requirements.

Apprenticeship programs train skilled workers by combining classroom instruction with on-the-job training under experienced journeymen.

Many employers in Delaware want to hire and train new apprentices but are restrained from doing so because current regulations require multiple journeymen or full-time workers to also be hired — a cost many small businesses can’t afford.

For electricians, Delaware has an apprentice-to-journeyman ratio of 1:1, then 1:3. That means a company with one journeyman may hire one apprentice, but then must hire three more journeymen before it can hire its second apprentice.

Other ratios include:

 

Sheet Metal Worker                                          1:4

Insulation Worker                                              1:3

Structural Metal Worker                                 1:4

Painters, Construction and Maintenance 1:3

Asbestos Worker                                               1:3

Industrial Maintenance Mechanic              1:3

Plumber/Pipefitter                                             1:3

Electrician                                                             1:3

Precision Instrument Repairer                     1:3

Glaziers                                                                   1:3

Construction Laborer                                        1:3

Dry Wall Finisher                                                1:3

Hard Tile Setter                                                   1:3

Roofer                                                                      1:2     

Sprinkler Fitter                                                    1:1

Child Care Worker                                              1:1

Elevator Constructor                                         1:1

 

Most trades require three or even four journeypersons for each apprentice. These ratios cripple contractors’ ability to fill the jobs that so many Delawareans desperately need.

Associated Builders and Contractors Delaware, the trade association that represents the construction industry, has requested that the secretary of labor reduce the apprentice ratio to 1:2 for all trades for 24 months. Doing that, the group argued, would allow construction companies to replenish the workers that have been lost throughout the last decade.

New Jersey and Maryland have 1:4 ratios for all trades, something Delaware’s unions and labor department have pointed to in response to the request to lower Delaware’s ratios.

Other states, like Montana, are taking action to support small businesses by reducing ratios.

In Nov. 2021, Montana’s governor, Greg Gianforte, reduced the apprentice to journeyman ratio 1:1 across the board. He emphasized that reducing the ratio would preserve workplace safety and training standards while also making Montana more competitive with our neighbors.

Industry leaders and experts praised the move, arguing it will especially benefit small businesses in rural areas where it is more difficult to recruit additional journeymen to supervise apprentices.

“For too long, unnecessary red tape has tied up employers looking to offer apprenticeship opportunities and build a more highly-skilled workforce,” Gianforte said at the time. “With this commonsense rule change, we can dramatically increase apprenticeship opportunities for hardworking Montanans to meet current and future workforce needs.”

Gianforte faced fierce opposition before enacting the rule change.

Critics argued it would be impossible to oversee and safely train if the ratio was decreased, despite Wyoming allowing two apprentices per journeyman, North Dakota allowing three apprentices per journeyman and Idaho allowing up to four apprentices per journeyman.

In those states, builders continue to safely build houses and staff job sites with even more flexible regulations than those enacted by Gianforte.

Because of decisions like that, Montana’s construction sector grew 12.3% between February 2020 and February 2022. Data released by the U.S. Bureau of Labor Statistics in March 2022 shows that 34,700 Montanans were employed in the construction sector in February, up from 30,900 in February of 2020.

In Montana and across the country, reducing ratios has proven to lower costs and enable companies to expand apprenticeship opportunities to new entrants to the trades at rates commensurate to their ability and experience.

Another reason to do it: Powerful labor unions benefit significantly from higher apprentice to journeyman ratios, while small businesses suffer.

Unions are comprised of many skilled workers across multiple jobsites and employers, giving them a larger pool of journeymen who can oversee an apprentice, making it easier for them to comply with apprentice-to-journeyman ratios than it is for small contractors who would have to hire more journeymen to gain an apprentice.

This gives unions a significant advantage when competing against small businesses in a short labor market.

Additionally, when companies are hiring, workers can still enter an apprenticeship program if they are not selected by the company due to being over their ratio limit.

Those apprentices are considered “trade extension students” and are able to attend class at night like apprentices and get credit for that, but they can’t count their on-the-job training hours which they are earning during the day and are needed to complete the programs.

Those trade extension students are in the same classes as apprentices from the companies where they work, but they don’t get the same credit for their work hours during the day because they aren’t considered apprentices.

That puts them at a career-altering disadvantage compared to their apprentice counterparts, and everybody loses. This is just another example of a simple problem that could be fixed by reducing ratios.

According to the Bureau of Labor Statistics, the construction industry needs 2.5 million workers to satisfy the demand created by federal infrastructure legislation.

Prior to the Infrastructure Investment and Jobs Act, Delaware’s Department of Labor identified construction as the third fastest-growing industry throughout the next five years.

Without the infrastructure bill, the department estimated the industry would need to immediately fill 5,380 positions to meet demand. That number is significantly higher now.

One way Delaware can fill that void and maintain a competitive edge over neighboring states is by following Montana’s lead and reducing apprentice to journeyman ratios.

Doing so will be especially important as the state seeks contracts to complete more than $1.2 billion worth of infrastructure improvements authorized by the federal infrastructure bill.

Delaware’s Regulations, A Barrier to Business

From: Kathleen Rutherford, Executive Director, A Better Delaware

Delaware businesses and workers are subject to some of the most stringent regulations in the nation, leading to slower economic growth, less competition, and higher costs. The result is that companies able to afford regulatory compliance are often large corporations — a barrier to entry for Delaware’s small businesses.

According to a Feb. 2022 study by the Mercatus Center at George Mason University, Delaware has 95,976 regulatory restrictions on the books, ranking 30th in the United States overall.

When considered proportionally to the state’s workforce, however, Delaware ranks first in the nation for most regulations per capita. According to a 2019 study from the Mercatus Center, Delaware far exceeds other states with 11 words of regulatory language per Delaware worker.

In fact, the Center found that it would take 374 hours to read the entire Delaware Administrative Code.

Given those statistics, it’s no wonder that the CATO Institute cited Delaware’s expanding regulatory code as one reason the state has fallen from the top of economic freedom indexes.

“Delaware has lost tremendous ground during the past 20 years,” a CATO Institute analysis says. “It now ranks in or near the bottom third on all three dimensions of freedom, earning its 44th place by all-around poor performance.”

One area of particular concern is the over-regulation of occupational licensing, wherein trained professionals are required to get permission slips from the state to begin working.

A 2015 report published by the Obama administration warned that the current licensing regime in the United States creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job.

“There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines,” the Treasury Department report says. “Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as state certification, may offer a better balance between consumer protections and flexibility for workers.”

The report further found that more than 25 percent of workers in the United States require a license to do their jobs, with most workers licensed by the states. That’s a five-fold increase since the 1950s.

Delaware is no exception. According to a 2018 Institute for Justice study on the economic costs of occupational licensing, 15.15% of workers in Delaware are required to be licensed by the state and 8.73% are required to have additional certification.

While licensing requirements do, in some cases, offer health and safety protections to consumers and employees, many regulations simply hold small businesses down and prevent upward mobility for trained workers.

So, what can Delaware do to expand economic freedom and unleash workers from burdensome and unnecessary regulations?

One might look to a proposal in Tennessee, where a whopping 30% of workers require licenses to enter the profession of their choice, collectively costing them $279 million annually in new licenses and $38 million in license renewals.

There, the Beacon Center of Tennessee proposed a four-step plan to reduce the regulations’ drag on the state’s economy:

  1. Occupational licensing should be curtailed or eliminated on low-income professions.
  2. Tennessee should eliminate occupational licensing for professions with no measurable and realistic threat to consumer safety.
  3. Policymakers should strictly control the extension of occupational licensing to new professions
  4. Improve public access to data on licensed occupations so researchers can better measure the costs and burdens of licensure and how many Tennesseans

These common-sense steps would work as well in Delaware as they would in Tennessee and would do nothing to eliminate licensure requirements that legitimately protect the health and safety of consumers and workers.

Lack of Focus Not Funding: Delaware’s FY23 Budget

From: Kathleen Rutherford, Executive Director, A Better Delaware

WILMINGTON, Delaware – In Governor John Carney’s budget presentation, he proposes a whopping $4.9B operating budget – 4.6% higher than the unprecedently enormous FY22 budget. Top spending priorities include education and workforce development –– two areas that have had marginal results despite increased funding year over year. Absent were any plans to reduce Delaware’s unfunded pension debt, reduce healthcare costs, or significant tax relief. More focus on delivering effective outcomes rather than increased spending would be more beneficial to Delawareans.

EDUCATION: Increased spending on education is not producing better results for our students. Spending per student in Delaware has increased by $5,000 ($13,000-$18,000) over the past eight years, while test scores have stagnated or declined. This year 26% of students tested from grades 3 to 8 were proficient in math, and 41% of students tested were proficient in English. The current proposed education budget focuses on spending – 10% of the allocation on infrastructure and approximately 70% for staffing following Delaware’s 80-year-old funding method.

Added to that pile of cash is Delaware’s supplemental federal funding that amounts to nearly $411M through the Elementary and Secondary School Emergency Relief Fund (ESSER). The DOE (Delaware Department of Education) can spend funds on programs to address learning loss due to remote learning during the pandemic. Our neighbors in Virginia spent $12,216 per pupil in the 2020-2021 school year, with 69% of their students proficient in reading and 54% proficient in math. Delaware’s educational focus is missing the mark.

WORKFORCE DEVELOPMENT: Delaware is not getting enough people back to work. Our state ended 2021 with 5.1 % unemployment, landing us in the bottom third of all states with 6,500 fewer people employed than in 2019, pre-pandemic. The Governor’s announcement of $50M in workforce development will not work if the plan does not focus on training for jobs that need to be filled now. Georgia shows us how to fill worker shortages without extra funding. This state had the fifth lowest unemployment rate in 2021 (2.8%) in the nation. Its Quick Start workforce training program is credited with getting people back to work by offering skills-based training to qualifying businesses at no cost, passing savings along to business owners who can reduce and, in some cases, eliminate training costs.

Helping the 75% of Delawareans who lost jobs in the early months of the pandemic who had a 12th grade or below education with only 49% of 12th graders proficient in reading and 28% proficient in math in the 2020-2021 school year would be a good place to start.

HEALTHCARE: Delawareans have suffered from high health care costs and limited access for years, something that the FY23 budget does not properly address. Medicaid is approximately 25% of our state’s budget and is expected to grow larger. Over half of Delaware’s Medicaid funding comes from the federal government, but that money is expected to shrink in the future, placing the burden on Delaware taxpayers. Delaware’s health care costs are already one of the highest per capita in the nation. The best path forward that Delaware could take would be to abolish the Health Resources Board. The Governor’s office and the Delaware Prosperity Partnership could work together with strategic funds to incentivize and entice new hospital systems to come to Delaware. This would improve access to health care at reduced costs, with quality outcomes.

PENSION DEBT: How long is our Governor going to ignore the elephant in the room? Year after year, Delaware’s ballooning pension debt is not addressed in the budget. Delaware’s overall financial condition worsened by 21% during the onset of the pandemic, mostly because of post-employment liabilities. A Truth in Accounting report from 2021 revealed that Delaware still has $1,819,158,000 of unpaid pension debt. With more than an $800M surplus, it is time to pay down this massive debt.

TAXES: While Governor Carney’s budget did include a 2021 unemployment insurance benefits tax exemption, this does nothing to help the workers who never took a day off during the pandemic or struggling small businesses. A 2022 study by the Tax Foundation shows that Delaware ranks dead last in corporate tax burdens and 44th in individual income taxes. With a burden of $31,300 per taxpayer. Several tax relief bills have been proposed this year which would make a 10% across-the-board cut to the state’s personal income tax rates; would reduce the corporate income tax by 30% and slash the gross receipts tax – sometimes referred to as Delaware’s hidden sales tax – by 50%. These proposals will collectively allow the taxpayer to retain more than $282M this year and more than $321M next year.

In the coming weeks, the Joint Finance Committee will conduct hearings where the Executive Branch will present their spending priorities which will eventually culminate as the General Fund Budget to be approved by the end of session on June 30th. Please contact your legislators in Dover and let them know why it is important for them to use these unprecedented resources more efficiently, enabling tax relief for you and your family.

Happy New Year!

From: Kathleen Rutherford, Executive Director, A Better Delaware

With a new year here, many of us have made plans for how to make 2022 a better year than 2021. At A Better Delaware we have done the same. This year we will be working harder than ever pursuing our mission of advocating for deregulation, responsible spending, and improved government accountability and transparency. We’ve created a list of resolutions for Delaware’s leadership that will help us fulfill our mission.

More Transparency

Delaware state government tends to minimize or even diminish the role of the citizen in decision-making, to the detriment of its constituency. Without transparency and accountability to influence better decisions, our officials are free to pass legislation to their own benefit, instead of that of its people.

A better way: Allow for maximum transparency by livestreaming the session (even after resuming full-time in-person), allow public access to session, file bills publicly with ample time for public and official review, and no longer pass important pieces of legislation overnight on the final day of session.

Improved Accountability

It seems every week we read new headlines about a Delaware politician engaged in a scandal that puts their own interests above those of the people, often with no consequences.

A better way: Formation of an independent advocate and guardian of legislative ethics in the form of an Office of Legislative Ethics. This commission should be made up of respected members of the community with expertise in law and legislative ethics who volunteer to serve.

End Corporate Welfare

Delaware’s game of corporate welfare is “a hell of an expensive lesson picking winners and losers,” and Delawareans are clearly the losers. Whether it was on the Delaware taxpayer’s dime or through federal relief funds, we saw many shortcomings in 2021.

A better way: Delaware lawmakers and leadership should reconsider their past failings and learn from their mistakes when approaching economic development via corporate incentives. After all, the definition of insanity is doing the same thing repeatedly and expecting a different result. Instead, we must attract businesses by having a better business climate with lower taxes and less regulation.

Develop a Strong Workforce

Delaware is now tied for 33rd overall among states in its unemployment rate, according to the U.S. Bureau of Labor Statistics. This is due in part to Delaware’s ineffective workforce development programing. There are several job training programs that do not connect planning with the training. Therefore, skills provided for professions do not always lead to gainful employment. Lack of information about how to access training is an obstacle for participation. Program evaluation is nonexistent making it impossible to measure performance.

 A better way: Delaware must move from a patchwork of semi-connected programs and services to building out the components of an integrated ecosystem which includes statistical evidence to support investments its workforce system and analysis of workforce training effectiveness, and outcomes. Only then will Delaware improve its standing in business competitiveness and economic growth.

Reform Individual and Corporate Taxes

According to the 2022 State Business Tax Climate Index from the Tax Foundation, Delaware is ranked 50th in the nation for corporate taxes and 44th in the nation for personal income tax. We need to be kinder to our businesses and citizens.

A better way: With $950M surplus in our state’s budget, there should be no tax increases. Rather reduce corporate tax to retain and encourage business development in our state. Lower Delaware’s individual income tax rate and put money back in taxpayers’ pockets. Both tax reductions will encourage economic growth.

This may be a relatively short list in comparison to the many issues we at A Better Delaware see in the First State, but we will continue to tackle every issue that falls under our platform in 2022. We hope you’ll join us.

Our resolution is simple: continue to do what we can to fight for Delaware taxpayers and businesses and make Delaware a better place to live, work, and start or own a business. Happy New Year! We look forward to advocating for and with you in 2022.

 

Oversight within the Delaware Legislature is Overdue

By: Kathleen Rutherford, Executive Director of A Better Delaware

It seems every week we read new headlines about a Delaware politician engaged in a scandal that puts their own interests above those of the people, often with no consequences. The recent failures of either Chamber to take serious action with two legislators, who were both arrested and charged with assault, is a true reflection of the lack of accountability within our state government.

Delaware’s laws surrounding transparency and accountability are notoriously weak. Rankings from the Center for Public Integrity gave Delaware an F for our lack of laws and systems deterring public corruption, placing us 48th among the 50 states. And it shows.

Currently the main authority to combat corruption in the state is the Delaware Public Integrity Commission. This is a seven-member committee (with one current vacancy) that only employs one licensed attorney. The core focus of this group is to ensure that ethics laws are properly administered for the Executive Branch, and financial disclosure laws/expense reporting laws are followed by all three branches. While this group should be capable of monitoring government behavior, their 2020 report indicates that they only conducted two investigations over the entire year. To make matters worse, the committee exempted itself from its oversight, making it extremely difficult to monitor its efficiency. Delaware is said to operate on an “honor system” in regard to public ethics laws, meaning most violations are not looked into unless an outside source informs the committee.

Having a committee that is not actively searching for misconduct is a hinderance to Delawareans since this makes individuals believe that they will not be prosecuted for their misconduct unless they are caught red handed. The solution for this would be to model our system after other states that are better suited to fight corruption. While still having room for improvement, Alaska ranked 1st in the nation in state integrity. This was largely due to easily accessible political finance data, and strict ethics rules that are properly enforced on the executive and legislative branches. The main duty of the Alaska Select Committee on Legislative Ethics is to uphold the Alaska Legislative Ethics Act and maintain trust in the institute of government. This act does a better job of outlining specifically how these ethical breaches should be handled, something that Delaware Title 29 does not do.

The people of Delaware need an independent advocate and guardian of legislative ethics in the form of an Office of Legislative Ethics. This commission should be made up of respected members of the community with expertise in law and legislative ethics who volunteer to serve.

The OLE should be funded sufficiently to support a staff capable of performing rigorous investigations, and unlike current law, anyone should be able to file a complaint anonymously to protect and encourage whistleblowers.

The public also deserves more insight into the personal finances and business interests of individual legislators to assess potential conflicts of interest. The forms currently used provide little meaningful information and are not readily accessible to the public. That needs to change.

We also need to reform our freedom of information law to broaden public access to important records and keep public officials honest and accountable. First and foremost, we need to close the loophole in the public records law that is designed to keep legislators’ official correspondence secret. Executive branch and municipal officials are subject to our open records laws, but members of the legislature conveniently exempt themselves.

Our state government is also rife with conflicts of interest. Many legislators moonlight with organizations that receive funding from the state or get hired by those organizations after having played roles in securing funding for them.

Any legislator who works for an organization that receives a significant amount of their funding from the state should not be allowed to sit on the budget writing committees or those that author the Bond Bill or Grants-in-Aid bill. We should also have a cooling off period that prohibits these organizations from hiring legislators until after they have been out of office for two years.

Finally, the pandemic showed that we can provide more visibility into the inner workings of state government through online streaming. Every committee hearing and floor activity should be video streamed and archived so members of the public can see with their own eyes what goes on in the statehouse.

Transparency and accountability must be key tenets of state government to deter corruption and generate more confidence in our political system. Delaware does not live up to the high bar we must set for our public officials – not even close. These proposals would be an excellent step forward in reminding politicians that they work for us.

Delaware’s Workforce Development Plan Needs More Work

From: Kathleen Rutherford, Executive Director, A Better Delaware

Of the $1.9 trillion American Rescue Plan Act (ARPA) signed by President Biden on March 11, Delaware received $925 million to invest in one-time projects. One of the three largest projects in Delaware is a $50 million dollar investment in workforce development with a focus on job training.

While investing in jobs training seems like a noble and smart one, it leaves many questions unanswered. The primary issue with Delaware’s workforce development plan is that there is no information about how the money will be spent. Governor Carney stated of the allocations that “we’re focused on investments that will build on the strengths of Delaware’s world-class workforce and support Delaware families and businesses who were most affected by the COVID-19 pandemic. These workforce development programs will help Delawareans develop the skills they need to succeed in a 21st century economy.”

The goals Carney provides of “building on strengths” and “developing skills” are ones that cannot be measured, and we don’t know what time frame it should be measured over, as neither program has a specified end date.

The jobs training program will be broken into two primary components – the expansion of the Pathways Program and Forward Delaware. The Pathways Program focuses exclusively on students and is receiving one-third of this allotment – an investment in Delaware’s future that does not help the approximately 26,000 unemployed adults who are struggling to pay their bills right now.

Pathways began in 2015 serving about 20,000 high school students and with this funding will grow to serving 32,000 middle through high school students. An additional $8.3 million will be added to the program through the state budget.

Forward Delaware was founded in August 2020 and is managed by the Delaware Prosperity Partnership. It provides 20-week certification courses (directed toward those who became unemployed due to the pandemic) in the fields of healthcare, construction/trades, hospitality/food service, logistics and transportation, and computers/IT. In its first year, about 3,000 Delawareans took advantage of its offerings but only 1,476 – less than 50 percent – completed a training course. The initial investment in the program was more than $15 million. The certifications that can be acquired through Forward Delaware will make workers eligible for higher-paying, more specialized professions, but it’s a large investment few individuals have used and the Prosperity Partnership openly admits it has not tracked hiring details, and simply reports that “the fact that Forward Delaware exists is a good thing.

A lack of alignment between workforce development and the training itself are one of the five major pitfalls of workforce development success – and the above statement proves it’s at least one of the reasons this initiative in Delaware is likely to fail.

A Workforce Innovation and Opportunity analysis has evaluated Delaware’s workforce development programs and noted one of its top weaknesses as providing skills and training for professions that may not lead to self-sufficiency.

According to the Education Commission of the States, Delaware does not have a policy or process in place to identify high-demand occupations. Without any data to support which industries need skilled workers, Forward Delaware may be missing out on training workers for areas employers need the most – and those that may produce the best outcomes for trainees.

Several other states have dedicated workforce training programs that put Delaware to shame. South Carolina’s Department of Employment and Workforce utilizes several different programs that give individuals the choice to find a specific program that works well for them. With so many different options, there are ample opportunities to get individuals back into the labor force once they have been properly trained. On the other side of the spectrum, there is Georgia QuickStart. This company has a single training program that can provide customized job training, which makes it easier to implement on a state-wide level. The program receives 44 percent of its funding from the state and has managed to create over one million jobs since its founding in 1967

In a more recent report, Delaware was ranked seventh out of eight states  in the mid-Atlantic region in the 2021 Regional Workforce Development Rankings – showing it’s one of the worst at providing a strong workforce development ecosystem. With a new failing job training program, it doesn’t seem like Delaware’s on track to move up the ladder.

Delaware must move from a patchwork of semi-connected programs and services to building out the components of an integrated ecosystem which includes statistical evidence to support investments its workforce system and analysis of workforce training effectiveness, and outcomes. Only then will Delaware improve its standing in business competitiveness and economic growth.