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Blogs and Articles

A Better Delaware celebrates one year

A Better Delaware celebrates one year today!

A weakened economy, poor business climate, high tax rates, and questionable practices in state governance all lead to the decision to form an issue advocacy organization that would work for Delaware taxpayers and businesses. One year ago today, A Better Delaware was finally launched to the public to tackle these issues.

“Delaware needed to tackle these issues and since lawmakers and leadership in the state weren’t making the effort, Chris Kenny and Ben duPont did. Thanks to them, every day I get to wake up and work to make my home state a better place.” — Zoe Callaway, Executive Director

When we launched on September 17, 2019, we were ready to fight for you. The response we received after launch let us know that Delaware was ready too, and thankful for our presence and advocacy. You let us know that you too are tired of the over taxation and regulation, the back room deals in Dover, and being left behind by your elected officials.

Facebook recommendations and messages, emails, phone calls, and more started to come in that thanked us for what we were doing and encouraged us to keep on, so we did. We ramped it up with a weekly blog, A Better Discussion webinars, and professional videos addressing key issues in the state. Our public advocacy campaigns, where constituents had an outlet to speak out against bad legislation directly with their legislators, resulted in hundreds of emails sent during the 2020 Legislative Session.

“The Delaware Small Business Chamber is not a political chamber but we advocate for issues that affect the Small Business Community and we think A Better Delaware is helping to make Delaware a more small business friendly state. Congratulations on one year.” — Bob Older, Founder and President of the Delaware Small Business Chamber

That wasn’t enough for us. We came to fight for you, and that meant helping keep Dover business and taxpayer friendly. Last month, ABD formed a PAC to begin electioneering in order to expand our cause.

A Better Delaware has done a lot to advocate for you, but we could not have done it without you. Your support and willingness to share ABD and our message has really resonated and has allowed us to do everything that we have so far.

“For our inaugural year, we are very fortunate to have our Executive Director Zoe Callaway as the heart and soul of ABD working tirelessly everyday researching, writing, posting, calling and discussing the mission critical issues for all Delawareans.” — Chris Kenny, Founder and Co-Chairman

Almost 10,000 followers, over 13,000 email subscribers, and over a dozen distinct advocacy campaigns later, A Better Delaware celebrates one year of working with and for you.

What does the next year hold? We hope you’ll stick with us to find out! For now, we continue to work to improve the following statistics:

Delaware deserves better. Together, let’s make A Better Delaware.

Stop the Reverse Revolving Door

Texas limits two groups of people from running for public office: felons and the mentally incapacitated. In 2017, the state considered making an interesting addition to that list when a bill arose that would prevent lobbyists from being able to run for public office.

At first glance, it may seem excessive to group lobbyists with felons and people with mental handicaps, but the measure had great intentions and some precedent.

The precedent here comes from major concern with the “revolving door” of politics at state and federal levels. The revolving door is when legislators move into lobbying or similar state-related positions after retiring from office. Critics of this practice cite major concerns surrounding government accountability and trust in government.

Those at the end of their time in office who are eyeing a lobbying role are more likely to be influenced by the company or interests that the will shortly advocate for, leaving the public at a serious disadvantage. Once in these lucrative, private sector positions, former lawmakers have inside connections and relationships with those they will now stand in front of, on behalf of special interests.

Federal actions to prevent the revolving door have not been successful, and neither have similar measures in Delaware. When state senate leader Patty Blevins (D—Elsmere) lost her re-election in 2016, her new position with the Division of Public Health seemed to be in violation of state rules against revolving door type activities, included in the ethics portion of the Delaware Code.

So, when a lobbyist decides to run for office, these concerns remain. This process is known as the “reverse revolving door,” and is still a breach of trust in government and weakens government accountability.

A South Dakota lobbyist-turned-Congressman came under fire for adding language in a bill that helped his former employer. The same can be expected at the state level, and may be easier to prevent.

Delaware can either be more susceptible to this problem, or can do better to prevent it. In a state where everyone knows everyone, interests are bound to get tied up, but we do not have to blatantly allow for special interests to enter the legislative process and pass bills in favor of their friends or former employers. Delaware does however have the framework in a forgotten set of ethics guidelines that could be applied to and enforced with the reverse revolving door.

We already struggle with transparency and accountability in this state. We must do better.

Delaware should move to end the revolving door of politics and be an example to the nation. Until then, the people should consider the implications of electing former lobbyists to office and the impact this will have on the future of lawmaking in the First State.

Delawareans have a choice: taxed to death or death to burdensome taxes

Only two things in life are certain: death and taxes. For Delawareans, this isn’t just an old adage, but real life.

Without caution from the people, this will not stop. Only the limited balance in the Delaware senate is currently keeping things in check—but only a little. Delaware’s tax increases over the last two General Assemblies (2016-2018, 2018-2020) were the 6th highest in the nation.

Delaware’s has the highest per capita revenue from corporate license fees and the fifth-highest per capita corporate income tax revenue. Corporate license fees accounted for 12.8 percent of Delaware’s state and local general revenue in 2017 (for comparison, the national average was 0.2 percent), but we risk losing this source of funding if we force businesses to incorporate out of state.

You’ll hear many people tout Delaware’s status as a “tax-free” state, but that simply is not the case. Yes, Delaware does not have the sales tax, but we more than make up for that. Take for example the reason why we are able to avoid having a sales tax: the gross receipts tax.

Delaware is one of only seven states with a gross receipts tax. These invisible sales taxes raise prices as these taxes are shifted onto consumers, and tend to impact lower incomes the most. Moving away from these economically damaging taxes can thus be a part of states’ plans for economic recovery.

As if that wasn’t enough, the state’s individual income tax burden is on the top half of the nation, with one of the highest individual income taxes. This has been an ongoing issue, but the impact of this tax will be felt harder as we continue operating under a COVID emergency order that has wrecked our economy.

Since 2016, Governor Carney approved large tax increases but he did not work alone. The taxes started as bills heard and voted on in Dover that were approved for his final vote.

These bills raised corporate franchise taxes, realty transfer taxes, alcohol taxes, and cigarette taxes. Delaware now has the highest real estate transfer tax in the nation and some of this highest excise taxes among all fifty states.

These tax increases were estimated to raise more than $200 million annually, the exact amount the state claimed was a “surplus” less than one year ago.Over-taxing residents is not a surplus or a celebration to commemorate with additional spending.

Have these measures even been worth it?

No. Delawareans get very little bang for their buck. Our taxpayer return on investment (ROI) is near the bottom nationally, despite having some of the highest taxes per capita. We spend more on education and health care than most other states, yet continue to see outcomes that put us in the bottom of national ranks.

Our representatives are not representing our best interests when they continuously raise taxes, taking money away from hard working Delawareans. The results speak for themselves, and what they’re saying is that it is time to change what we’ve been doing.

In November, Delawareans have a choice: taxed to death or death to burdensome taxes.

Say No to Delaware’s Status Quo

Delaware: banks, beaches, Biden. We’re the First State and the Diamond State—a small wonder. We are known by and for many things, but home means something different to everyone.

Delawareans take a lot of pride in our little state, and so do we at A Better Delaware. That is why we are working to improve the state for every Delawarean, and for our future.

Delaware is 34th nationally in the Best States to Live In report from WalletHub. A lot of things factor into that position.

Delaware’s quality of life ranked low at 47th nationally, based on indicators like the average commute time, access to public transportation, and more. The same report had Delaware’s economy at 38th, based on the unemployment rate, general tax-friendliness, entrepreneurial activity, and more.

Delaware has room for improvement on all of these indicators.

Improving these issues, either through legislative or regulatory change, would have a massive impact on the state. Not only would it be better for Delawareans to see these changes, but these measures would help to attract businesses into the state as well. Right now, Delaware plays a costly game of corporate welfare at the taxpayer’s expense, despite that being at the bottom of the listof what businesses look for when selected a location.

We consistently rank poorly nationally for unemployment, and are currently 36th for July 2020. There’s no amount of money that can be given to a corporation to hide our shortcomings in these important areas.

Even if a business does select Delaware, are we attracting workers?

Delaware ranks 29th overall for its affordability, and is even lower for its cost of living and housing affordability. That’s quite unattractive for prospective residents. We have one of the highest income taxes and Delaware’s real estate transfer tax being one of the highest in the nation. Even if we attract businesses and worker to the state, the extra thousands involved in buying a home may make the workers second-guess their decision.

It’s issues like this that need to be fixed in order to make our home a great place to be. Education, quality of the job market, a trained workforce and so much more are the key to improving Delaware.

Currently, our representatives and leaders are not working to truly improve Delaware. Every action seems like a band aid for a bullet wound, and Delawareans are tired of seeing their state crumble because of it.

Now is the time to critically think about the decisions that have been made in Dover, who is making them, and why. The 2021 Legislative Session could be the one to solidify these national standings and push us further down the path of our status quo, or could be the one that makes a decisive change that could put the First State back on top.

Pro-Business Group Expands Efforts in Delaware with Formation of New PAC

Press Release from our sister organization, A Better Delaware PAC

A Better Delaware has formed the A Better Delaware PAC to participate in the 2020 election cycle

Wilmington—A Better Delaware, a pro-business, pro-jobs group that also promotes more accountability and transparency in Delaware government today announced the formation of A Better Delaware PAC to expand their advocacy efforts into 2020 campaigns.

“We must apply pressure at the grassroots level. We must educate legislators in the State House,” says founder Chris Kenny. “But we will never see real change if we keep sending the same anti-taxpayer, anti-business lawmakers back to Dover, and we must protect legislative allies who understand what makes for a stronger economy.”

A Better Delaware (ABD) was launched last year in response to the direction our state was headed due to decisions made by our lawmakers in Dover. Kenny believed the state lacked a voice for taxpayers and small businesses, and recognized that the First State was far from first when it came to economic, business, and employment rankings nationally. In fact, Delaware was consistently in the bottom for fiscal stability, employment, business climate, and tax rates.

Since then, ABD has spoken out on numerous issues impacting Delaware’s business climate, transparency in government, taxes, the Certificate of Need process, and many others. In less than a year, it has gained a following on Facebook of nearly 10,000 people.

A Better Delaware PAC takes ABD’s efforts to the next level through direct voter contact during the campaign season to help ensure the election of pro-taxpayer, pro-business, good government candidates.

“For too long, Delaware campaigns have been dominated by special interests who stand to benefit from more government spending at the expense of taxpayers,” said Kenny. “ABD PAC will be a counterweight that backs candidates who put Delaware first.”

Help Delaware Workers Now

Delaware employers and workers are scrambling to get back to normalcy and get back to work. Our economy is suffering and many are left to wonder what will happen to their businesses and livelihoods if lockdowns persists, or a second wave of COVID—19 hits.

Things are tough now, but they have never been easy. Pre-pandemic, Delaware was the 7th worst place to start a businesses and ranked 34th for employment. Many factors contributed to the First State being left in this position, but one stands out: regulations.

As of last year, Delaware’s regulations included 104,562 restrictions, 6.7 million words, and would take 9 weeks to read through—and all of this is in addition to federal regulations. For a small state, that’s quite a regulatory burden.

State and local regulations often directly intervene in specific markets, causing greater distortions than broader federal regulations. State regulations on industries, employers, and workers restrict competition and are job killers.

Delaware ranks 42nd for its regulatory environment and 37th for economic environment. The state ranked worst in the nation for its regulatory environment, West Virginia, also ranks 48th for its economic environment, and this trend holds for the states with the worst regulatory environments. Regulations are an economic plague.

Now, more than ever, we must address our codified limitations to an economic boom and a better business climate. Currently, one out of eight Delawareans included in the labor force are unemployed and the state has lost close to 50,000 jobs since last year.

Governor Carney recently signed an Executive Order creating the Rapid Workforce Training and Redeployment Training Initiative to assist Delaware workers and their families who have lost jobs and income due to the COVID-19 crisis. This program will help identify key areas for employment and implement rapid training and certifications to get people back to work faster.

Other actions like this could be done swiftly to help Delaware workers and businesses.

In last week’s blog, we mentioned the apprenticeship ratios in Delaware that are massive job killers. Other items, such as licensing requirements and permit processes could be fixed through rapid action to reduce the regulatory burden on employers and workers. These regulations hurt the ability for places like barber shops and nail salons to start their businesses.

The state’s prevailing wage sets an artificially high price on contractor wages on government projects, effectively reducing the total number of jobs that are filled and limiting the work that can be done.

Helping independent contractors has been an important issue that has come to light during the pandemic, as many statewide were unable to file for unemployment due to regulations that technically held up the process for benefits to be distributed to these workers. Other restrictions on licensing and independent firms also keep doctors and lawyers from locating and developing their practices in Delaware.

Environmental, energy and utility regulations place a major strain on many businesses, especially manufacturing businesses.

Long term, Delaware should take steps to address its massive regulatory body. Regulatory reform is not a new wave idea springing from the ashes of coronavirus. Notable regulatory reform programs exist in Indianapolis, San Diego, New York City, Colorado, Minnesota, Virginia, and in our neighboring states Pennsylvania and New Jersey. In May 2019, Idaho did an entire regulatory reset, where their state government eliminated all regulations and will only bring back the ones it chooses.

While mimicking Idaho would be a massive undertaking, the state could create an independent reform commission, and address regulations by deciding which are truly beneficial, focus on outcomes instead of processes, simplify regulations to make it easier for businesses to understand, and be transparent in their process.

Last May, a bill was introduced in Delaware that would have required an economic impact statement for regulations, as well as a timeline for review of regulations with an emphasis on minimizing the economic impact they would cause. This bill was stalled in committee and never received a vote.

This should be a consideration for the Delaware legislature in the next legislative session, but more immediate actions like those listed above can be taken now to help Delawareans.

It’s time to fix job killing regulations

In a move uncharacteristic for our current state leadership during the pandemic, the Delaware Department of Transportation (DelDOT) recently announced new efforts to support small businesses in Delaware. The Small Commercial Entrance process will reduce costs and wait time for eligible small businesses, and an expedited review and approval process is expected before the end of summer.

More businesses and business groups are speaking out about the lack of attention and help they have received from state leadership, after 4 months of the State of Emergency and little clarity or assistance. For small businesses and new businesses, the DOT rule changes are a bit of hope at this time.

If this can be done in the DOT, other agencies could potentially issue rule changes to help employers and workers since the administration refuses.

Businesses have been crying out for help after being forced to shut down, but workers are still suffering through the impact of COVID-19 in Delaware.

Delawareans who were laid off at the start of the shut downs and applied for unemployment in March have yet to receive benefits. Often it is difficult to get an answer when contacting the office for answers or help with payments. Without work and without unemployment being delivered in a timely manner, this has left Delawareans wondering how they will stay afloat for the remainder of this pandemic. This would position the Delaware Department of Labor (DOL), as the next logical entity to make rule changes in order to help struggling Delaware workers find jobs.

A big concern with current DOL anti-business regulations is the mandatory and restrictive apprenticeship ratios that prevents Delaware businesses and contractors from hiring new workers now.

Delaware’s ratio means that you can have 1 apprentice for every 3 journeyperson. Businesses and contractors are not permitted to hire a second apprentice until there 6 journeypersons, and so on as you hire more apprentices. These overly restrictive rules sideline Delaware workers from good paying jobs right now.

Bottom line: these mandatory ratios are job killers.

For instance, there are close to 30 trades that are restricted to only hire one apprentice for every 5 journeypersons. The DOL touts 1,500 current apprentices, but if this ratio was adjusted to 1:1 or 1:2, this would result in thousands of new hires immediately.

By DOL making this change in the manner that the DOT issued their rule changes to help small businesses, trade workers in Delaware would have more opportunities for employment, and the state could see an increase in total jobs available. There are likely other opportunities for the DOL and other agencies to readdress their rules and regulations to help Delaware’s workers.

State regulations reduce job opportunities and limit the workforce—especially for unskilled or low-skilled workers—and must be addressed in order to get people back to work.

A better Delaware would establish an inter-agency committee immediately to help put Delaware back to work right now.

Why won’t Delaware help small businesses?

A Better Delaware has consistently spoken out against poor leadership regarding economy and business in Delaware during the COVID-19 pandemic. We were not the only ones. The Delaware State Chamber of Commerce, the Central Delaware Chamber of Commerce, the Delaware Small Business Chamber of Commerce, the Delaware Prosperity Partnership, legislators, and business owners and leaders have all called for more attention to this critical issue Delaware faces.

When the Chambers and DPP offered to help, little was done. When industry leaders begged for help, state leaders told them that they were not the priority—only health was. While the health-related efforts here were commendable and necessary (Delaware currently has the 13th highest per capita case count in the nation), we firmly believe that saving lives and saving livelihoods goes hand-in-hand.

On April 13, three weeks after the mandatory stay at home order issued by Governor Carney, and after much outcry from the business community for a lack of attention, Delaware entered a multi-state task force to address reopening with New York, New Jersey, Connecticut, Rhode Island, Massachusetts, and Pennsylvania.

As if Delaware leadership was controlling the task force itself, transparency has been missing from the efforts of the task force. At the time of publication, we could not locate a website or report for the Covid-19 Regional Advisory Council. What we do know is that New York and New Jersey have recently turned their backs on Delaware despite the alliance.

On June 1, perhaps after realizing the futility of this partnership, Delaware announced its own entity that would, through a subcommittee, address business issues related to COVID-19. It took 69 days, a weak regional effort, and continued pressure from various stakeholders to finally establish Delaware’s Pandemic Resurgence Advisory Committee.

So far, the committee itself has taken little action, despite meeting twice a month and having supplemental weekly subcommittee meetings. The Business Subcommittee has met several times, and the most they have accomplished is asking for data on the impact of COVID-19 on Delaware’s agriculture industry and requesting better communication and more transparency (sound familiar?).

Frankly, Delaware’s efforts to help its own businesses have been next to nonexistent, spare the H.E.L.P. loans that are only available to the hospitality industry. It’s not that we can’t afford to help our small and family-owned businesses: we just gave $2.5M to a British bank that only a year ago took 500 jobs out of Delaware, and the state also received close to $900M in CARES Act funding that has yet to be allocated. We have simply chosen not to help.

Delaware can and mustdo better. Below is a list of what other states have done to help their small businesses, and shows what could be done for our own in the First State.

Arkansas: $7M for zero-interest loans from Arkansas’s Quick Action Closing Fund

California: $50M loan guarantee program

Washington DC: $33M Small Business Recovery Microgrants program

Florida: $49M for Small Business Emergency Bridge Loan Program

Illinois: $500M Small Business COVID Relief Program, $20M from Community Development Block Grant funds for small business grants, $60M for small business grants

Indiana: $30M for Small Business Restart Fund (funded by CARES Act)

Iowa: Iowa Small Business Relief Fund, Iowa Targeted Small Business Sole Operator Fund

Louisiana: $50M loan guarantee program for small businesses, $300M of CARES for small businesses

Maryland: Emergency Relief Grant Fund for small businesses, Emergency Relief Loan Fund for small businesses

Massachusetts: $10M Small Business Recovery Loan Fund, Empowerment Grant for Small Businesses

Michigan: Michigan Small Business Relief Program, $100M of CARES Act funding for Michigan Small Business Restart Program

Minnesota: Small Business Emergency Loans (interest free), $62.5M in CARES Act funds for a small business grant program

Mississippi: $300M of CARES Act for a grant program for small businesses, with priority for businesses that did not receive federal PPP loans

Montana: Will use some CARES Act funds for business stabilization, deploying funds over an immediate- to mid-term time frame for forgivable loans, and low- or zero-interest loans

New Hampshire: $400M of CARES Act funds for small business grants

New Jersey: $10M for New Jersey Small Business Assistance Loan program, $5M for the New Jersey Small Business Assistant Grant Program, $6M for Small Business Lease – Emergency Assistance Grant Program

New York: $100M for New York Forward Loan Program for small businesses

Pennsylvania: $60M for Working Capital Access Program for small business loans, $225M for micro-business grants

South Dakota: $10.5M for a Small Business Relief Fund

Tennessee: $200M of CARES Act funds for the Tennessee Business Relief Program

Vermont: $400M in CARES Act funds for an economic relief and recovery package

Washington: $10M for the Working Washington Small Business Emergency Grant program

Wisconsin: $75M for a small business assistance grant program

Wyoming: $50 million in grants through the Wyoming Business Interruption Stipend

Delaware ranked poorly in COVID standings

Four months ago, our world changed.

A recent study State Economies Most Exposed to Coronavirus revealed:

  • Delaware ranks 29th overall
  • Delaware ranks 39th for “Highly Affected Industries & Workforce”
  • Delaware ranks 51st overall for “GDP Generated by Highly Affected Industries as Share of Total State GDP”
  • Delaware ranks 46th for “Accommodation and Food Services”
  • Delaware ranks 47th for “Entertainment and Recreation”
  • Delaware ranks 50th for “Retail Trade”
  • Delaware ranks 42nd for “Educational Services”
  • Delaware ranks 51st for “Other Services (except government and government enterprises)”

We may be the First State, but we’re last where it counts.

If we look back at studies released in the past two years, it’s clear that Delaware’s economy and business climate were not suited for the corona-crisis.

A study from WalletHub ranked Delaware as the 7th worst state to start a business and the 2nd worst for small businesses. Delaware’s fiscal stability was 45th in the nation and ranked 44thfor overall fiscal health.

At the start of 2020, before coronavirus, Delaware’s economy was one of nine nationally predicted to shrink over the next six months.

The coronavirus forced people out of work and businesses to close their doors—some forever. At first, the effect of or economy was reminiscent of the Great Recession in 2008.

According to the Federal Reserve Bank of Philadelphia, Delaware’s business conditions recovered from the Great Recession at a noticeably slower pace than the rest of the nation, taking three more years to stabilize than the average.

This would mean that a return to our dismal economic position isn’t likely until at least 2023. Unfortunately, it is now clear that the economic impact of COVID-19 is worse than 2008.

What will that mean for Delaware moving forward from this crisis?

First, we hope that this will push Delaware to be more focused on the small and family-owned businesses right here in the state. Instead of being used to play a losing game of corporate welfare, taxpayer dollars could help the businesses in their own communities.

The COVID-19 pandemic should lead to wiser saving and spending habits from our state leaders in the future. During the next legislative session beginning in January 2021, A Better Delaware is looking for more serious consideration and evaluation regarding funding, programs, and expenses, as well as a codified savings plan.

If we use this as a much needed wake up call, we have the chance to truly make Delaware better in the future.

“A hell of an expensive lesson picking winners and losers”

Corporate welfare, or financial assistance from government to private businesses, has long been a game that is played in Delaware economic development. Unfortunately, this is a game that the state struggles to win.

Perhaps the most notable failure was Fisker Automotive, an California hybrid electric car company that received $21.5M in 2009. The deal, announced by Gov. Jack Markell and Vice President Biden, was intended to bring around 2,500 green jobs to the state. As time went on, the state had to cover utilities for the flailing company, and it was clear the deal had been a mistake.

Fisker never made a single car in Delaware.

Determined to continue giving away money, the state passed a bill in 2011 that put Delaware on the hook to energy company Bloom Energy until 2032. Part of this deal was a $12M grant given in 2012, on top of nearly $130 million in energy surcharges paid be Delawareans in the first 5 years alone.

Dan Simmons, former vice president of policy at the Institute for Energy Research, believed Delaware’s deal was unusual:

“Bloom was given a whole bunch of incentives and the surcharge, which is very strange. It looks like Delaware was doing everything it could to give Bloom money.”

But for the First State, aggressive incentives for major businesses is par for the course. In 2017, when the company was forced to repay the state $1.5M for failing to meet the proposed goals of the grants, legislators called the deal an “economic disaster” and “a hell of an expensive lesson picking winners and losers.”

That lesson faded quickly from memory.

Solenis,Amazon, and many more were given taxpayer dollars from Delaware’s Strategic Fund after it was clear that the massive Bloom deal was bust in 2017. Most recently, the state awarded $2.5M to British bank Barclay’s to bring 323 call center jobs into Delaware.

The kicker? This is only a year after the company moved 500 jobs out of Delaware into New Jersey, and 3 years since Barclay’s initially took 200 jobs from the state by closing another call center in Newark.

This announcement came as many businesses within the state are still awaiting help related to COVID-19, and some are forced to close their doors permanently. It’s a slap in the face.

While the state’s history of sweetheart-deals-gone-bad is enough to question the practice, since 1997, Delaware has given almost $500M in taxpayer dollars for business subsidies and grants, despite evidence showing that the main factors in a business’ decision to locate or expand in a state are the state’s business climate, tax codes, regulatory structure, labor force and education systems.

A Better Delaware would tend to these factors instead of continuously blowing money bribing companies to pick our state, only to under-perform or up and leave shortly after. Fixing these issues would improve the state overall, and use taxpayer dollars to help the taxpayers, as well as economic development.