Blogs and Articles

Should the ‘California Way’ be the ‘Delaware Way’?

From: Kathleen Rutherford, Executive Director

If you haven’t yet heard, Delaware’s Division of Air Quality (housed in DNREC) is now considering regulations to ban new internal combustion vehicles by 2035.  Following the lead of the State of California, only new electric vehicles can be sold in Delaware, although it does not explicitly ban fossil fuel-based cars.  Why would we want to do this?

According to an executive order signed by Governor Newsom of California, this is part of his draconian attempt to fight climate change. Remember that carbon dioxide is not a pollutant; it is a life-affirming gas that is needed by vegetation to thrive on our planet.  Carbon dioxide concentrations have been rising over the last thirty years and, except for selected areas of deforestation and urbanization, satellites have shown that a majority of the planet has become noticeably greener. The planet is becoming warmer, but carbon dioxide is merely a bit player in this manifestation of climate change. And no definitive trends exist in flood or drought frequencies, the frequency, intensity, or landfall potential of tropical cyclones, or the increase in the rate of sea-level rise.

Moreover, electric vehicles are not green. The batteries on which they run require extensive environmental degradation, particularly in China and Africa, to extract them from the earth. Their production requires much energy to produce, which is usually obtained from the combustion of fossil fuels. At present, the batteries cannot be recycled and thus they litter landfills. And most of the electricity produced, distributed through the grid, and used to recharge the batteries comes from the combustion of fossil fuels.

In Delaware, the stated reason why DNREC proposes to adopt the California Air Resources Board (CARB) regulations is to comply with EPAs ozone standard.  Tropospheric ozone (ozone near the surface) is a pollutant that damages vegetation and makes breathing difficult, particularly for those with asthma. But New Castle County currently complies with the EPA standard, although it is lumped in with the Philadelphia SMSA which does not.

Even left-leaning news outlets are questioning the wisdom of the California regulations.  The New York Times raises the concern that success depends on how well consumers take to electric cars and their limitations, and how rapidly auto manufacturers can solve the problems associated with mass production of electric vehicles.

Used vehicles are exempt, which could cause Delaware (or California) to become like Cuba where old used cars fill the highways.

The 1959 Cuban Revolution and the subsequent import embargo that Castro placed on foreign car imports and their parts stalled automobile development. Thus, Cuban streets were filled with 1950s vintage cars for decades afterwards.  After 2035, will Delaware look like Cuba did?

Both the Associated Press and The Washington Post notes these limitations but go on to argue that infrastructure issues can create further difficulties. Although California has 80,000 charging stations (the most in the country), they will need to increase that by a factor of 15 to refuel all of the new electric vehicles—Delaware will need many more as well.  Rural areas are more of a challenge; thus, Kent and Sussex Counties will lag behind.

Moreover, to accommodate these new electric vehicles, a more robust energy grid, an enhanced supply chain of materials such as lithium for batteries, and the availability and affordability of vehicles for all income levels are prerequisites.

It is premature to consider these regulations as the California ban on internal combustion engines has been challenged in court by 17 states, mostly in the Midwest.  The Missouri State Attorney General commented, “If California can set restrictive ‘gas emissions’ standards, manufacturing becomes astronomically expensive, and those additional costs are passed onto consumers, many of which are Missourians.”  If Delaware adopts such standards, expect consumer costs to skyrocket since the cost of transportation affects virtually everything that consumers purchase.

Given all of these challenges, it is highly premature to pursue a policy that will radically change our transportation, supply chain, and manufacturing network, and that will cause state taxes to rise astronomically to accommodate this policy.  If we make it more expensive for businesses to operate in Delaware, they are likely to move to another state, taking their jobs with them.  Since carbon dioxide is a life-affirming gas and that electric batteries are not green and require much energy, largely fossil-fuel based, to produce, this is not a viable economic and environmental choice.

Thus, a better solution would be to study the arguments of both sides of the existing litigation and wait to see the outcome in the courts. In the meantime, we must weigh the costs of this repressive policy in light of the adverse economic impacts that the policy is likely to have.  The correct path forward is to hold off on pushing this into State policy until more information and the court decision can be brought to bear.  Moreover, the state needs buy-in from its citizens rather than hurriedly enact this policy through a DNREC edict.

Delaware Affordable Housing: Legislation Won’t Fix Any of It

By: Kathleen Rutherford, Executive Director

Delaware is in the midst of an affordable housing crisis — there’s no question about it. Rents are rising, inventory is dwindling, and people are struggling. As legislators consider possible solutions, they must be careful not to exacerbate the problem.

Data released this year by Housing Alliance Delaware says the state faces a shortage of more than 18,000 affordable and available rental homes for extremely low-income renters. An annual household income of $46,846 would be required to reasonably afford a two-bedroom rental home in Delaware, according to the National Low Income Housing Coalition. The fair market rate for that two-bedroom home would be $1,071 per month, according to the U.S. Department of Housing and Urban Development.

In response, lawmakers have proposed a number of bills that, however well-intentioned, will do nothing to fix Delaware’s affordable housing crisis. One such bill — Senate Bill 90 — would have forced landlords, large and small, to accept Housing Choice Vouchers, commonly known as Section 8 vouchers.

In its synopsis, sponsors wrote that the bill would “prohibit discrimination based on source of income,” suggesting the reason a landlord might turn down Housing Choice Vouchers must be discrimination. What sponsors didn’t mention in the bill is that units in the Housing Choice Voucher program are subject to myriad additional regulations, including regular mandatory inspections — ones that take weeks or even months to schedule.

The Housing Choice Voucher program was designed to incentivize rental owners to participate. This is accomplished, in part, by the government providing direct rental payments to rental owners, some of whom are thrilled to accept Housing Choice Vouchers. After all, the money is guaranteed by the government and landlords don’t have to worry about rent checks bouncing or coming in late. There is no denying, though, that the program is administratively burdensome, difficult to navigate and subjects all landlords, whether they like it or not, to the unpredictable timelines of government agencies. For that reason, forcing a landlord into the program — especially a “mom and pop landlord” — is unfair and will likely have the opposite of the intended effect.

Another bill, Senate Substitute 1 for Senate Bill 101, would have guaranteed tenants the right to legal counsel in eviction proceedings and established an eviction diversion program aimed at resolving disputes after a landlord files for eviction.

Proponents said the bill would protect tenants who are unable to afford legal representation and are outmatched when they arrive in court for their eviction proceedings. The reality, however, is that by giving tenants access to free legal counsel during evictions, proceedings are drawn out over months and landlords are forced to retain legal counsel of their own. All the while, landlords may not be receiving their rent payments.

That cost — and the cost of the attorney — inevitably get passed on to consumers in the form of rent increases. With exceptions for extreme situations, having a tenant in a home and paying rent is what’s best for both landlords and tenants. Only in those most extreme of situations is eviction necessary, and when it is, forcing additional expenses on landlords only adds insult to injury. Prior to the pandemic, the process to adjudicate such cases would take two months or less. Currently, due to staffing shortages and other issues within the JP Court system, these cases can take six months or more. This loss of income must be compensated for, most often in the form of rent increases. That’s not because landlords are greedy — it’s because if a landlord goes out of business, a family is out of its home.

Other lawmakers have pushed more extreme proposals, such as rent control and affordable housing mandates. The reality is, these proposals don’t work. “While rent control appears to help current tenants in the short run, in the long run, it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood,” according to a study from the Brookings Institute.

There are two solutions to the affordable housing crisis that may prove effective, and neither involves forcing landlords to keep rents artificially low or accept vouchers they’re not equipped to accept. First, we should focus on getting the government out of the way. Zoning laws and regulations on building heights, lot sizes, and parking requirements have proven to exacerbate the housing shortage. An estimated 424,000 families could access federal housing assistance if regulations were relaxed in just 11 metropolitan cities, a study 2021 study found.

Second, government must incentivize private developers to voluntarily create more affordable housing. This could be achieved by creating a state-level Low Income Housing Tax Credit program. The LIHTC was created in 1986 and signed into law by President Reagan. The purpose of the legislation is to encourage a private/public investment to preserve and construct new affordable rental housing. Alone and in combination with tax-exempt private activity bonds, the LIHTC has been the most productive sources of affordable housing financing in the nation’s history. The equity raised through the tax credit investment makes it possible for developers to attract the financing needed to create or restore low-income rental housing.

Nineteen states have expanded the federal program on the state level or created entirely separate programs. In Missouri, for example, every dollar spent on the program resulted in $10.59 in economic activity and $5.81 in gross state product. As a result, Missouri expects $5.23 billion in statewide economic impact and $2.86 billion in gross state product, as well as the creation of 35,600 construction jobs.

Delaware could also eliminate or loosen regulations on tiny homes and accessory dwelling units, or ADUs. ADUs are typically secondary dwellings built on existing lots such as guest homes, mother-in-law suites or tiny homes. Many Delaware cities, like Newark, outright ban ADUs. At the county level, pages of burdensome regulations impose restrictions on the structures. By cutting through the regulatory obstacles, Delaware could support its citizens’ property rights while also alleviating the affordable housing crisis.

It’s by incentivizing developers, reducing regulation, and supporting property owners’ rights that Delaware will be able to make a dent in the affordable housing crisis. Efforts to force landlords into programs they don’t want to participate in and meddle with the supply and demand of Delaware’s housing market, will have the opposite of the intended effect.

Let’s Protect Delaware’s Beach Highway—for the “Correct” Reason

“Even on sunny days, southern Delaware’s Route 1 has been overtopped with water from tidal flooding between Dewey Beach and Fenwick Island,” stated a recent article on WHYY’s website indicating that tropical storms and nor’easters threaten to cut off access to the highway that runs along a thin strip of land between the ocean and the bay.  In addition, the article indicated “the state launched a study with help from the consulting firm AECOM to determine how to make the road more resistant to flooding threats.”

With dramatic images from the barrier islands of Sanibel Island, Naples, Cape Coral, and other coastal areas near Fort Myers and Punta Gorda fresh in our minds’ eyes, now is a good time to plan how Delaware should respond to coastal flooding.  The entire range of tropical storms, hurricanes, their remnants, and nor’easters garner most of the attention as they cause significant damage in drastically brief timespans.

It is important to note that flooding occurs now during high tidal conditions in many areas along the coast, including the State’s barrier island, State Route 9, and the road to South Bowers.

Thus, I applaud the State’s effort.  Unfortunately, the State’s Secretary of Transportation, Nicole Majeski, tied the AECOM assistance solely to…climate change.  Citing Governor Carney’s Climate Action Plan, she argued to a US Senate Committee that “Delaware is seeing firsthand the effects of climate change and sea level rise” as part of the effort’s plan.

Why invoke climate change?  Over the years, Delaware’s beaches have been damaged by tropical storm and hurricane remnants that have passed by.  Between 1923 and 1974, a report by the University of Delaware noted significant events occurred in 1923, 1924, 1927, 1928, 1929, 1932, 1933, 1934, 1935, 1936, 1937, 1943, 1944, 1950, 1951, 1953, 1954, 1955, 1956, 1957, 1960, 1961, 1962, 1964, 1967, 1968, 1969, 1971, 1972, 1973, and 1974 with multiple storm events occurring in some years.

Suffice it to say that coastal erosion, damage to buildings, and overtopping of roadways from coastal storms have been commonplace in Delaware—and well before the age of “climate change.”

However, the quintessential event occurred in 1962; fifty years ago this past March.  Known colloquially as the “Five-High Storm” (because it lasted through five high tide cycles), the nor’easter hung on for three days.  Significant damage occurred along Delaware’s barrier island and, along the coast, Route 14 (renamed Route 1 in the 1970s) experienced up to four feet of flooding north of the Indian River Inlet.  In fact, flooding was so severe that the ocean and inland bay waters met as the barrier island was overtopped.

The inlet where Lewes Creek flows into the Delaware Bay has migrated several miles northwestward from the 1600s until the early 1900s when it was channelized into the Roosevelt Inlet.  The Indian River Inlet, a natural break in the barrier island that connects Rehoboth and Indian River Bays to the Atlantic Ocean, has moved northward over the years.  Since the late 1800s, many efforts were made to dredge a channel but reoccurring storms opened and closed various pathways.  It wasn’t until the late 1930s that jetties were installed to keep the inlet from silting in again.  As every geologist knows, land can be dynamic and barrier islands, in particular, are highly dynamic changing considerably over time.  We must always remember that fact and plan accordingly.

So, yes, it is a very good idea to plan for the future; especially when these events have happened (relatively frequently) in the past.  Delaware needs a plan to protect its citizens and visitors from the ravages of storms and tidal fluctuations that frequent the coast.  Evacuation plans and routes have been mapped, but when a storm is bearing down on the Delaware coastline, these evacuation routes must remain open.  What we need now is an action plan that addresses keeping roadways open and protecting citizens and visitors.  I applaud such an effort.

What I fear most is that this discussion will be tied to addressing climate change and that reducing fossil fuel usage will be a magic bullet to protect Delaware’s coastline.  Indeed, the Secretary of Transportation has indicated she views this as an arm of Governor Carney’s Climate Change Action Plan.  As history shows us, these events have occurred rather frequently over the past century.  Regardless of your view on climate change, I encourage the Executive Branch to proceed with plans to protect Delaware’s citizens without turning these much-needed plans into another effort to demonize fossil fuels and push for more wind and solar.  All the green energy in the world will not stop tropical storms and nor’easters from adversely affecting citizens and visitors to The First State.

Delaware’s Healthcare: Profit Over People?

Delaware is missing the mark by a large margin regarding affordable healthcare. Currently, Delaware ranks 5^th in the country at healthcare cost per capita at $12,899 and is ranked as the 20^th most expensive for health insurance premium costs at $6600 per year. There are several factors that contribute to health care costs, however emerging evidence suggests one large contributing factor is the trend towards reducing competition via the growth of large health institutions who squelch competition in the marketplace.

Since 2012, the percentage of physicians nationwide who work in physician offices has changed from 60.1% to 26.1% as of 2022. This trend increased more rapidly because of the COVID-19 Pandemic. Between 2019-2021 physician employment in hospitals or other corporate entities increased 19%. During that same time, there was a 38% increase in hospital or corporate ownership of physician practices. Many states have limitations on the corporate practice of medicine. This limitation can serve to limit the conflicts of interest that often result in interference of a provider’s judgment due to outside influences (CPOM). Unfortunately, Delaware is not a Corporate Practice of Medicine state thereby facilitating corporate ownership of medical providers. In such ownership situations, providers’ judgment may be clouded by leadership that does not hold patient care as their primary driver for decision making. Often larger hospital and corporate institutions justify their consolidation as a means of reducing costs in health care. However, the evidence seems to point towards the contrary.

Provider consolidation and the resulting in-house referral systems which develop are driving costs of healthcare upward. Several studies have shown a clear link between physician consolidation and increased healthcare costs. The Journal of Health Economics indicates physician charges increased by 14.1% following acquisition. Vertical integration in health care has been proposed as a means of reducing cost. However, it can result in in kickbacks for inappropriate referrals thereby driving up costs.  The Health Care Cost Institute found that the average price for a given service was always higher when performed in a hospital outpatient versus a private office setting.

Provider consolidation is accompanied by promises that the acquisition will allow the entities to work on innovative and improved models of care and with higher patient satisfaction and enhanced clinical outcomes. However, elimination of competition among providers creates incentives to hike prices and removes incentives to create value for patients. Consolidation tends to reduce the quality of care delivered due to disincentive from eliminating competition.

Privately owned physical therapy practices in Delaware are becoming subject to this tidal wave of change. This year Physical Therapists encountered a legislative challenge (SB 245) of their practice act from orthopedic surgeons. Their intent is to remove the prohibition of a physical therapist working in referral for profit employment and partnership circumstances. They purport that orthopedic surgeons owning physical therapy practices will result in newly formed entities that can provide better collaborative care and more innovative models of care thereby reducing costs, enhancing patient satisfaction, and improving patient outcomes. If enacted, SB 245  will result in larger institutions with conflicts of interest owning and controlling most of the outpatient physical therapy in Delaware. The result will be the extinction of privately owned physical therapy practices which will adversely impact the quality of care of this most critical component of the health care system. In many cases, physical therapists determined the functional outcome of individuals who sustain serious injury or surgery. The examining board of physical therapists and athletic trainers got it right in 1983 by inserting language which prohibits physical therapists from working in referral for profit situations due to the conflict of interest that arises. The intent of this provision was to eliminate the clouded judgment that occurs when financial incentives are the foundation for a medical referral.

Rather than focusing on and expanding anti-competitive strategies that only serve to fatten the wallets of those at the top of those entities at the expense of patients, Delaware should focus on creating strategies that facilitate healthy competition among providers thereby eliminating financial incentive for referrals. Replacing financial incentive for medical referrals with a motive that is seeking out the best interest of the patient will result in reduce costs, higher quality care and greater patient satisfaction and trust.

Why Wilmington’s Climate Change Plan is Bad for the City – Part 2

Part I focused on the plans by Resilient Wilmington and the State of Delaware to address the impacts of sea level rise by focusing on limiting carbon dioxide emissions within the State.  These plans are based on bad science – carbon dioxide is not a magical climate control “thermostat” and attempts to limit such emissions will have virtually no impact on sea level rise – as well as being bad environmental policy – the economic effects will be potentially devastating to the State’s economy.  But if sea level is rising and coastal communities are threatened by tropical storms and nor’easters, what prudent response should Delaware be taking?

First, we must not be spending taxpayer money on so-called “solutions” that will have no positive effect on Delaware; on the contrary, such “solutions” will adversely affect our economy.  For more than a decade, Delaware has participated in the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade scheme that focuses on subsidizing wind and solar energy and penalizing participating states for using fossil-fuel-based energy sources.  David Stevenson of the Caesar Rodney Institute has shown that RGGI has caused our out-of-state electric demand to increase from 22% to 64% in just the last five years, and it may reach 100% as early as 2024.  

This leads to lost local jobs, decreased tax revenues statewide, and higher electric rates with lower reliability.  Delaware’s participation in RGGI is the most significant force that keeps us focusing on reducing greenhouse gases.  Thus, Delaware must terminate its participation in RGGI.   Anything that makes energy more expensive and costs jobs to Delawareans is anathema to making Delaware better.

Mitigation and adaptation are the keys to addressing sea level rise and climate change, in general – not the red herring of cutting greenhouse gas concentrations.  And all of this starts with education so that all participants and those with vested interests understand the problem and are equipped with viable solutions that will affect a positive outcome.  It is a strange and very human flaw that newfound solutions always seem to leave behind common sense and traditional approaches.  The latter are almost always more effective and less expensive.

Our longest tide gauge record on the East Coast lies in The Battery in New York City.  Its record extends more than 165 years and indicates that sea level rise in lower Manhattan has risen steadily and consistently at a rate of about 1.14 inches per decade.  In Delaware, the rate has been 1.48 and 1.42 inches per decade at Reedy Point and Lewes, respectively.  As discussed in Part I, sea level rise in Delaware is greater due to extreme coastal subsidence in the mid-Atlantic region.  This, of course, has nothing to do with carbon dioxide levels and the rate of sea level rise will not be affected by reducing them.

The bigger threat to Delaware is coastal erosion from normal beach processes, which are exacerbated during times of storms (i.e., tropical storms/hurricanes and nor’easters).  Delaware’s Atlantic coast is a barrier island that is constantly being reshaped by coastal processes.  During storm periods with high wind and waves, these coastal processes and its concomitant coastal erosion are accentuated.

Consider the Cape Henlopen Lighthouse.  Completed in 1767, it was located at least 1500 feet from the ocean.  The Delaware Geological Survey (DGS) has documented changes to the Delaware coast  since the mid-1850s showing that Cape Henlopen has become more elongated to the northwest and thinner (along the Atlantic coast) over time.  This erosion led the Cape Henlopen lighthouse to fall into the ocean in April of 1926 during a nor’easter.  Almost a century later, the location where the lighthouse once stood is now several hundred feet offshore.

The loss of coastal areas from natural sea level rise, coastal subsidence, and storm-induced erosion is, therefore, a fundamental problem in Delaware.  Coastal communities such as Bethany Beach, for example, regularly require beach replenishment by the expensive process of dredging sand from offshore to rebuild an eroded beach.   Prior to 2009, a discussion was begun to decide what to do about the expense incurred by beach erosion in Bethany.  Should the state continue to pay for beach replenishment, or should it simply allow nature to take its course and cede the boardwalk and then Atlantic Avenue, when the time comes?  If we decide to fight the natural process of erosion, then who should pay for it?  Residents who live there?  Tourists who enjoy Bethany during the summer?  Citizens of the State because what benefits Bethany Beach also benefits the State’s economy? Or should there be an equitable sharing of the cost among these three entities?

But before that discussion could get underway, then Governor Markell appointed Collin O’Mara as his DNREC Secretary.  Secretary O’Mara, who was the creator of San Jose’s “Green Vision” – a plan to reduce greenhouse gas emissions by enhancing economic growth through investment in green energy boondoggles.  O’Mara brought Bloom Energy to Delaware, where the State and its energy ratepayers have lost almost $500M to create less than 400 jobs.  Through the Bloom Energy fiasco, natural gas has been redefined as a “renewable energy source”, but only if consumed in a Bloom Energy fuel cell – even though the process releases greenhouse gases into the environment.

But O’Mara’s statewide emphasis on solving our problems by addressing climate change, derailed the discussion of what to do in Bethany Beach.  According to O’Mara, if Delaware greatly reduced its greenhouse gas footprint, the rise in sea level would be “solved”.  The science was blatantly ignored by Delaware’s leaders and the loss of our beaches through a long-term, natural trend in rising seas, coastal subsidence, and coastal erosion during storm events was to be addressed by reducing our greenhouse gas footprint.  Nothing could be farther from the truth.  Coasts are eroding and being inundated over time, but the process has nothing at all to do with carbon dioxide emissions.

Moreover, this affects a variety of different types of businesses and people from all walks of life in all parts of the State.  Along the Atlantic Coast and the Inland Bays, it affects those affiliated with the summer tourism industry and many of the more affluent who can afford to buy and build on land along the coast.  In the Delaware Bay, it affects seasonal fishermen, boaters, and bird watchers who enjoy the annual migration of the many bird species that pass through the region.  In New Castle County, industry and businesses in the cities along and affected by the Delaware River are affected.  From diverse populations such as those living in Bethany Beach, Slaughter Beach, Kitts Hummock, New Castle, and Wilmington, much of Delaware will be affected by sea level rise in the coming decades – and the impact will be completely unaffected by our greenhouse gas footprint.

Since reducing greenhouse gases in Delaware will have no effect whatsoever on our climate or on sea level rise, what should a prudent response strategy be?  We need to return to science and adopt scientifically defensible solutions.  Education of the true causes in sea level rise are necessary to allow citizens to understand the problem.  A true discussion among all parties with vested interests must be begun to decide where we should fight natural processes and protect our interests and where we must adjust to these natural processes.  As suggested earlier, adaptation and minimization of the direct impacts of coastal processes are the keys to addressing sea level rise – cutting greenhouse gas concentrations are expensive “non-solutions” that will have virtually no impact.  But, most importantly, all of this starts with education so that all participants and those with vested interests understand the problem and are equipped with viable solutions to affect a positive outcome.

                                           ABOUT A BETTER DELAWARE

A Better Delaware is a non-partisan public policy and political advocacy organization that supports pro-growth, pro-jobs policies and greater transparency and accountability in state government. A Better Delaware can be found on Facebook @abetterdelaware and at www.ABetterDelaware.org.

Why Wilmington’s Climate Change Plan is Bad for the City – Part I

From: Kathleen Rutherford, Executive Director, A Better Delaware

WILMINGTON, Del.-Recently, the City of Wilmington and the Delaware Department of Natural Resources and Environmental Control (DNREC) announced the release of a report on how Wilmington will prepare for tomorrow’s climate risks.  This follows several years after DNREC issued a similar report for the State.

The report focuses on how Wilmington will experience resilient economic growth through the development of innovative green solutions, update the City’s transportation system to be more environmentally friendly, and protect the City’s infrastructure and connect residents to resources that will protect them from climate change.  This plan is bad for the City of Wilmington owing to a number of reasons.

First, Wilmington has many other issues that are more pressing than climate change.  When adjusted for technological developments, we have experienced no significant increase in the events that kill the most people and adversely affect our lives—heat waves, cold spells, floods, droughts, hurricanes, and tornadoes, for example.  Changes in land use and a rising population, rather than increases in greenhouse gases, are most responsible for the occurrence of heat waves, floods, and droughts in Delaware.

The biggest climate-related scare posed by this report is sea level rise.  While sea level is indeed rising, it is rising for two primary reasons, neither of which are related to greenhouse gases.  Globally, sea level has been rising at a relatively constant rate of about 7 inches per century, with no observed increase due to carbon dioxide.

Indeed, we are still emerging from the last Ice Age and sea levels will continue to rise until virtually all of the polar ice caps are melted—or until we descend into another Ice Age.  But Delaware lies at the margin of the Laurentide Ice Sheet, which reached its maximum extent 21,000 years ago.  Isostacy caused the Earth’s crust to depress beneath the ice and to rise at the perimeter of the ice sheet during the glacial period.  Now that we are in an interglacial period, the station at Reedy Point is descending at a rate faster than anywhere on the East Coast.  Thus, rising sea levels in Delaware are due to melting ice from the demise of the last Ice Age and from isostacy due to the loss of the ice sheet—not from increasing greenhouse gases.

Moreover, Delaware is down more than 50% in per capita carbon dioxide emission over the last half century and is the fourth lowest state in carbon dioxide emissions overall.  Thomas Wigley, an alarmist scientist from the US National Center for Atmospheric Research, argued that if every nation on the planet followed the Kyoto Protocol, the global change in temperature would be only 0.13°F by 2050.  This would come at enormous cost but would be undetectable.  Thus, the impact of Delaware reducing its carbon footprint further would be all cost and no benefit.

But the “green remedy” to climate change in Delaware is potentially more disastrous than the supposed effects of climate change.  The proposal will make energy more expensive (so people will use less of it) and develops technology such as wind- and solar-energy programs and electric vehicles, all of which are still experimental.  Someone has to pay for this expensive technology because this so-called “renewable” energy either causes utility bills to rise drastically, or, with government subsidies, taxes rise drastically.  Businesses will suffer harm because the added cost of energy is a business expense that would either be (1) passed on to the consumer or (2) alleviated by moving to another state or country (if they can) which will cost Delaware jobs.

It is always suggested that the ‘green revolution’ will create jobs; in fact, it never does.  Bloom Energy was sold to the State legislature because it would create 900 jobs (a pittance, compared to the jobs lost by the exit of Chrysler and GM) but it has never created as many as 400, despite the cost of more than $325M to Delmarva Power ratepayers and a total take of almost $500M by Bloom Energy.  Consider Spain, where the concept of green energy has failed miserably.  After spending more than 100B€ in subsidies, their power is inconsistent at best and must be matched by energy from fossil fuel sources to keep from experiencing blackouts.  The price for energy has spiraled out of control as it has more than doubled in just the last year.

Furthermore, the argument that wind and solar can meet our energy needs would “require an outsized amount of land or offshore areas for wind and solar farms.”  Efforts in Delaware are pushing the legislature to approve wind turbines off the coast of Bethany Beach (which require a significant right-of-way to connect the energy to the grid) and an extensive buyout of farmland in Kent and Sussex counties is underway to install large arrays of solar panels.  We are trading food for energy and consequently, the cost of both will skyrocket.  Delaware is poised to become the next Spain, with respect to energy.

One of the most devastating “solutions” proposed by proponents is to have the State legislature limit utility increases.  Price controls always result in scarcity because if we force a business to charge less than the cost of manufacturing plus a reasonable profit, they won’t produce.  Green energy is an expensive proposition and can be facilitated only by large subsidies. But what is forgotten in this discussion is that wind and solar are not dispatchable and require backup energy (usually from fossil fuels) when the wind stops blowing and the sun stops shining.  Delaware presently pays $100M per year to keep the coal-fired power plant in Millsboro available to cover for the intermittency of wind and solar energy.  In 2021, the plant was dispatched for only 20 hours.  The additional expense (over that returned by selling the electricity) is paid by Delaware’s energy ratepayers.

The reliance on these intermittent energy sources to run our grid makes energy more expensive, less dependable, and will hurt beach towns, small coastal municipalities, restaurants, hotels and all other businesses and citizens who need to use energy.  So, if the plans set forth by Resilient Wilmington and the State of Delaware to address the impacts of sea level rise by focusing on limiting carbon dioxide emissions is scientifically useless and bad environmental policy, what should our coastal communities be doing?  Stay tuned for Part II to find out!

Increased Tax-Free Benefits for Military Retired: Too Little, Too Late?

From: Kathleen Rutherford, Executive Director, A Better Delaware

On July 21, 2022, Governor Carney signed SB 188-1 into law before a roomful of National Guard who will not benefit from it.

Amending Delaware Code, Title 30 will exclude an additional $10.5K of military pensions from taxable income. Lawmakers in Dover say it’s “an incentive for military retirees under age 60 to locate in Delaware,” ignoring three dozen other states where military pensions are 100% tax-free.

Many others, like Virginia, are working to phase in tax exemptions in progressive $10K increments to a maximum of $40K in 2025.

In 2004, when advocates first began beating the 100%-military-pension-exemption-drum, about 20 States were income tax-free. SB 95 was born in 2005, SB 48 followed two years later. Both ended up in desk drawers.

Senator Mantzavinos introduced SB 188 (originally 100% tax-free) in January 2022 when there were 26 tax-free states. While Delaware struggled to whittle SB 188 down to an amended $10.5K benefit immediately upon retirement, two more States came on line. On the day SB 188-1 became law, Delaware trailed 75% of America.

Furthermore, the bill excludes National Guard even though the Reserve Component (RC) was in previous versions. One “grey zone retiree” –an RC member with “20 good years,” vested for retirement but not yet 60, the age at which they draw their pension–told me he will leave Delaware so he can keep all his military pension.

Delaware’s new law is unlikely to entice anyone unless they were already coming for other reasons. Our Governor points to our excellent retiree tax benefits. Kiplinger Newsletter agrees: Delaware is the most tax-friendly place to retire.

And that is precisely the problem! With so many retirees flocking to Delaware, who will provide goods and services to this aging population? Veterans and Military Retirees (MR) provide a solution since they tend to be community-minded, physically fit, and with solid work ethics in skill sets employers seek.

Delaware ranks 15% in the nation based on the percentage of veterans (in 2019, 66,896 of them –8.8%– were veterans.) But working-age veterans only make up 18% of that total (12,053 are Gulf War II era vets). The same is true for our 9,000 MR; less than 2,000 are of “working age.”

Veteran v. Retiree. According to USC Title 38, a veteran is anyone who served on active duty for as little as 180 days and was not dishonorably discharged. The majority of veterans (81%) never reach retirement, either by their own choice or the military’s up or out system. While 85% of veterans receive Honorable discharges, a veteran may be homeless or have been terminated for medical problems or needs of the service. On the other hand, MR stood the test of time, proven worthy in the knowledge of the job, of dedication to duty, and leadership.

Civilian v Military Retirees:  Whereas retired civilians cease working, the MR is just beginning a new career. The average MR is a 38-year-old sergeant with a working spouse and college-aged kids. Officers might be 52 because they entered after college. Enlisted or officers, most MR are college educated. Eighty percent of the force are enlisted, so 80% of retirees are enlisted. The average enlisted military pension is < $35K per year, <$46K for officers.

Unlike civilians, MR earns more in their second careers than the amount of their military pension. Hence, a tax-free MR pension is a “loss leader” to attract highly skilled talent to Delaware, whose civilian income (and that of their spouse) remains 100% taxable.

Military skills are needed. Most MR excel in highly technical jobs that are in demand. Any job you can think of, there is a military MOS equivalent. But we cannot attract these skills because Delaware ranks middling to worst as a place for RM.

Kiplinger Newsletter ranks Delaware as worst in “The Ten Least Tax-Friendly States for Military Retirees”.  According to Kiplinger, our $12,500 tax-free pensions “is smaller than similar exemptions available in other states that do not fully exclude military pension.”  Our new bill does not change this fact. It only makes it available sooner.

Delaware fares better in WalletHub, ranking 26^th because WalletHub included non-financial comparisons, one of which is Delaware’s low homeless vet population. This factor may apply to veterans but rarely to MR.

Too little, too late. Delaware needs 100% tax relief on military pensions now, not just an additional $10.5 tax-free advantage for those under 60.

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?”