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In The News

Was Delaware’s unemployment system prepared for coronavirus crisis?

From the News Journal

Facing more than 90,000 initial jobless claims since the coronavirus pandemic hit Delaware, state officials estimate they will run out of unemployment funds around the end of June, when they plan to start borrowing from the federal government to pay out benefits.

Like other states, Delaware has been draining its unemployment insurance trust fund during the pandemic-triggered economic downturn. But unlike more than half of states, Delaware didn’t enter the crisis prepared.

Instead, Delaware is one of 22 states and territories whose unemployment trust funds weren’t funded to a level of solvency that the U.S. Department of Labor says is adequate to weather a recession. The state had close to $173 million in its unemployment fund this January.

Delaware Secretary of Labor Cerron Cade said the way the state taxes employers has hindered the unemployment fund’s growth.

Experts and the federal government recommend building up the state’s unemployment reserves while the economy is strong, and drawing on the funds during recessions. Unemployment funds are maintained with taxes employers pay on wages for workers.

Nineteen states increase the amount employers must pay into the unemployment fund as wages grow.

But in 2013, Delaware lawmakers mandated that the higher the unemployment insurance fund, the lower the tax burden on businesses. That means the fund grows at a slower rate the closer it gets to solvency.

“On the back end of that, as the trust fund begins to get to a lower balance, we start taxing employers more,” Cade said. “During a time period when you want employers to hire more, why would you make it more costly for them to hire someone?”

Cade said the state was considering other formulas to administer the unemployment insurance tax.

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General Assembly Announces Plans to Reconvene Legislative Session

From Delaware House Democrats
House, Senate will conduct business through virtual session to meet constitutional obligations

DOVER – The leaders of the Delaware General Assembly announced plans Thursday to virtually reconvene the second half of the 150th legislative session, starting later this month.

Following extensive legal and logistical research, the General Assembly will implement a plan that allows the House and Senate to meet to their constitutional obligations efficiently and effectively, while also protecting the public, staff and legislators from the risk of spreading COVID-19.

“From the moment we first postponed session in March, legislative leaders said our priority was protecting the health of legislators, staff and the public. That priority has not changed,” said House Speaker Pete Schwartzkopf. “During this State of Emergency, we have worked with and through the governor’s office to implement many of the policies we normally would have passed through legislation.

“But we also have been working on how the General Assembly can resume session during this public health crisis. Unfortunately, it is not as simple as setting up a video conference call. We have to lay everything out carefully so that we are prepared and can function as normally as possible when we reconvene. We believe we have a responsible plan to share with the public.”

Until recently, Delaware law required the General Assembly to meet in person in Legislative Hall to conduct business. However, the Legislature amended the Delaware Constitution in 2018 to allow for session to take place in alternative locations during an emergency. Given the current circumstances, legislative leaders have determined that the best and safest way to meet is through a virtual session.

“Thankfully, we have the technology to hold this unprecedented session in a way that will protect the public’s health while also allowing the public to follow the proceedings in a way that’s very similar to how we conduct business at Legislative Hall,” said Senate President Pro Tempore David McBride. “Our main priority will be to ensure our state agencies can continue to provide the vital services our residents depend on. That means passing a balanced budget that accounts for a sharp decline in revenue and the cost of protecting the health of our most vulnerable residents.”

Under the plan, legislative leaders issued a joint letter to all General Assembly members Thursday (attached to this release) outlining the process for the next meeting of the Legislature.

 

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Desperation grows for restaurants, retail as recovery in sight

From Delaware Business Times

“Desperate times call for desperate measures.”

That’s how Dominic Marino, general manager of Gallucio’s Italian Restaurant, recalled his decision this week to dress as Santa Claus and walk the streets near his Trolley Square-area business to drum up some attention from prospective customers.

The days at the restaurant are a hit-or-miss experience due to state-imposed limitations to takeout or delivery service only, Marino said. On Mondays, it’s common for the restaurant to ring up only $200 in total sales.

“If we don’t open up soon, we will be forced to shut our doors permanently,” he said.

Marino isn’t alone.

With Delaware’s economy still largely shutdown amid the spread of the COVID-19 virus, many small business owners in the state are growing weary of the lack of customers and fearing that their doors may never reopen.

A late April survey of 285 Delaware businesses found that one in four believed they only had enough cash to last another four weeks and more than 80% of respondents reported declining revenues. Workers have already suffered, with the survey by the state’s economic development agency Delaware Prosperity Partnership (DPP) and the state’s chambers of commerce finding that 1,900 workers had been furloughed, laid off or terminated by respondents amid the pandemic, accounting for about 17% of their total workforces.

Gov. John Carney has faced increasing public pressure to begin easing restrictions on businesses as the lockdown lingers on. This month, he has opened Delaware’s public beaches, community pools, ice cream shops, and salons and barbershops under strict limitations, but many of those hit hardest, including restaurants, small retail shops and hotels, are still waiting for significant help.

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Chambers discuss reopening businesses with governor

From Delaware State News

DOVER — Chambers of commerce representatives statewide met with Gov. John Carney as discussion to further reopen businesses continues during the COVID-19 pandemic.

Following a roughly hourlong conversation Wednesday afternoon, more is planned. The chambers will now meet with Deputy Chief of Staff for Policy Albert Shields and Division of Small Business Director Damian DeStefano, attendees said.

The point of contact connection with Mr. Shields and Mr. DeStefano was crucial for members, Delaware Small Business Chamber President Bob Older said.

“We as a group want to be in on the conversation for the regulations that will be announced coming up,” he said. “If you have regulations in place and businesses are ready to open now then they should be allowed to do so.”

According to Central Delaware Chamber of Commerce President Judy Diogo, “It was a good phone call that had a lot of good comments made on both sides.

“We’re just trying to get businesses open sooner rather than later.”

After the meeting Ms. Diogo said she hopes for businesses returning prior to June 1. On Tuesday, she said May 18 was a target date.

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Guest Column: Why does Gov. Carney dislike small business?

From Delaware Business Times

Commentary from DSBC President, Bob Older

Delaware Small Business Chamber President Bob Older submitted this to the Delaware Business Times as an “open letter to small business owners in Delaware.” 

I want to apologize to all small business owners in Delaware.  I’ve said before that I don’t believe Delaware is very small business friendly.  I have tried to make people understand business in Delaware better and in some cases, we have made great strides. However, with top-level people, it doesn’t appear we have made an impact yet.

I understand we are in difficult times.  I understand it’s a fine line between health and economy and that no matter which direction we all take there may be no right answer.  We care about our loved ones just as much as we care about making a living and putting food on our tables.  It’s not an easy decision and I think we all understand that and the ramifications that come with it.

My personal issue is that our small business owners deserve better.  We deserve better leadership at the very top.   I agree that things needed to be done to prevent our hospitals from being overwhelmed and to protect the most vulnerable of our population.   On a personal level, in my opinion, what we have done since then is not the right answer.

The industries with the best lobbyist get to do things that others could not do.  The governor has said when trends go downward, we will start the processes of reopening.   Which Governor should we listen to and which is running our state?  Seems like Governor Cuomo is making more decisions than the one we elected is doing.   The one we elected says that hospitals are at half of the capacity which we expected.  That is great.   Numbers in New Castle and Kent Counties have had significant drops.  That too is great.  We have allowed dollar stores, big box stores, gun stores and the like to open up and sell more than food.  Reasons?  Either police enforcement would have been too costly or lobbyists threatened potential lawsuits.  Is that what we as a state need to do? Sue?

Over the last few weeks, thousands of people, small business owners, legislators, and most of the chambers of commerce in Delaware have reached out to key people to offer options, make some suggestions and in some cases, demand the state reopen.   Last week, the Governor opened up a few industries, mostly curbside, to help start up the economy — the bare-bones basics to “show” he was doing something.  Instead of saying those that qualified could open the next day, he made them wait four more days.  At the same time, he then pushed the opening of Phase One two more weeks – absolutely contradicting his own statements, charts, actions etc.  THAT makes little to no sense at all.  In most areas, numbers are dropping.  In all areas, hospitals are doing well, as are the people in the state.   So why push it further away?

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Philly Fed chief: Delaware faces uneven recovery

From Delaware Business Times

PHILADELPHIAThe head of the Federal Reserve Bank of Philadelphia told Delaware business leaders Tuesday morning that he expects the state’s banking and finance sectors to weather the coronavirus pandemic while manufacturing will “bounce back” as it subsides. But he also said traffic at the Port of Wilmington and the state’s tourism-dependent beaches may be in for a tough year.

Patrick T. Harker, president and CEO of the Federal Reserve Bank of Philadelphia and the former president of the University of Delaware, outlined an uneven economic recovery for the First State, where New Castle County will likely endure better than Kent and Sussex counties.

Delaware’s travel and hospitality sector – an area where the southern counties are particularly dependent — may face “a longer and more painful contraction,” Harker said in a conference call with the Delaware State Chamber of Commerce. That would be spurred by businesses reducing corporate travel amid the increasing use of teleconferencing software, like Zoom or Skype, and the hesitance of many families to visit crowded places such as Delaware’s public beaches.

“There will be demand. People will still, understandably, have cabin fever and they’ll want to get out on some sort of vacation, but they may take small steps before getting on an airplane or trying to go long distances,” he said.

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Central Delaware chamber pushing for more businesses to reopen Monday

From Delaware State News

DOVER — The Central Delaware Chamber of Commerce is pushing to reopen more businesses by Monday, and will make a pitch to Gov. John Carney during a teleconference this afternoon.

CDCC President Judy Diogo said the organization’s letter to the governor on Monday emphasized “well thought-out plans” to provide a healthy environment for arriving patrons and employees. The correspondence was shared with the state’s 13 other chamber branches, who will also join the call, she said.

Currently, Phase 1 economic reopening is scheduled for June 1 under the governor’s state of emergency order. While some essential businesses have stayed open throughout COVID-19’s arrival in March, others later opened with restrictions and some remain shuttered.

In the past month, Ms. Diogo said eight CDCC business members – small retail stores – have closed permanently.

“That’s devastating to hear,” she said. “They said there was no possible way to continue due to the financial impact of being closed.”

Other business owners are, Ms. Diogo said, “desperate and frightened, some of them are angry and they feel frustrated. They’re confident in the steps they’ve taken to provide safe and secure settings and are ready to open back up and get to work. “

The CDCC has approximately 850 small- and mid-sized company members who have about 36,000 employees combined. Ms. Diogo said the recurring theme during discussions is that companies have outlined in great detail their plans to provide best practices upon reopening. Businesses would be amendable if hours are initially restricted, Ms. Diogo said.

“Businesses need the option to reopen at this point, which some might not do if they don’t feel ready to do that for whatever reason,” Ms. Diogo said. “For those that do, however, we all feel very confident and trust that they’ve made serious and well thought-out efforts to safely accommodate anyone associated with them.”

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Judge rules Delaware property tax system unconstitutional; major changes to residents’ bills could follow

From The News Journal

A judge has ruled that Delaware’s property tax system is unconstitutional, potentially triggering significant changes in annual tax bills for the first time in decades.

Vice Chancellor J. Travis Laster wrote on Friday that all three counties calculate tax bills with property values that are so outdated some taxpayers get an unfair discount while others pay taxes on a larger share of their property’s actual worth.

Those inequities violate the state constitutional requirement that property owners be taxed equally, Laster said in a 149-page ruling in Delaware’s Court of Chancery.

“By continuing to use the decades-old valuations when preparing their assessment rolls, the counties treat owners of similar properties differently,” Laster wrote.

The ruling could eventually affect every property that is taxed in Delaware, and begins a debate on how to make the state’s property tax system fair in the eyes of the courts.

Laster’s opinion asks attorneys for both sides to submit a schedule in 45 days to govern that discussion, which is likely to be litigated in court before any residents see changes to their tax bills

The plaintiffs, a group of education funding activists and Wilmington officials, want property values to be reassessed — a potentially costly, months-long process in which assessors visit each property and update its value in current housing market conditions.

It could lead to property tax increases for those who are currently underpaying relative to the market value of the property, decreases for those who are overpaying and some tax bills changing very little.

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Open letter to Gov. Carney from business leaders

From Delaware Business Times

Dear Governor Carney: 

Since the beginning of the COVID-19 pandemic and the necessary restrictions on economic activity enacted by the State, The Delaware Business Roundtable and the Delaware State Chamber of Commerce have been working together to provide our assistance to safely and responsibly enable a phased reopening of Delaware’s economy. At the outset, we want to be clear that we believe any action to reopen the economy must follow public health guidance to be certain Delaware does not experience a resurgence and put additional pressure on the state’s healthcare system. 

We are writing today to offer two specific pieces of work: 

COVID-19 Best Practices: This is a guidance document for Delaware’s business community, developed after surveying and discussing these issues with businesses statewide. We believe this document will provide a basic guide to businesses outlining essential activities they must consider as they execute a phased reopening. We are working to disseminate this document widely to our members and beyond; 

Putting Delaware Back to Work: Economic Recovery in the First State: This is a series of strategic, long-term policy recommendations with consideration that the economic recovery from the pandemic will take far longer than any of us may have initially imagined. Thus, now is the time to make meaningful public policy changes and investments so that we can jumpstart efforts to create a higher skilled workforce, a streamlined regulatory approval process, easy access to broadband, and more. 

Many agree that the pandemic has brought to light some of the challenges Delaware faces in competing with other states for jobs, talent and investment. The goal is clear: we should act with urgency now! Why? So that in two or three years we can look back and assert unequivocally that in the midst of a national crisis Delaware leaders – representing both state and business interests – acted responsibly in the short term and also took the long view to put Delaware on a forward-looking, carefully considered path that resulted in economic prosperity for all Delawareans. We believe that, working closely with you and the General Assembly, many of the proposals articulated in the attached document should be enacted within the next 30 days as a means of generating jobs. As has been said before, we should never let a serious crisis go to waste; it’s an opportunity to do things we think we could not do before. 

Read the full letter here

Legislators Call On Governor To End State of Emergency Citing Alarming Problems

From First State Update

A group of Delaware legislators is calling on Governor Carney to reopen the state.

In a letter dated April 30, 2020, the group said they can no longer remain silent and are urging him to end the State of Emergency.

Read the letter below:

Governor John Carney
Tatnall Building
150 Martin Luther King Jr. Blvd.
Dover, DE 19901
Dear Governor Carney,On March 12, you used your authority under the Delaware Code (Title 20, Chapter 31) to declare a State of Emergency in reaction to the perceived threat posed by the
COVID-19 pandemic. 

Since that time, you have renewed the State of Emergency and issued 13 modifications of the declaration.

We were supportive of the initial actions you took. Given the dire projections and the opinions of health experts at the time, we too believed these actions were prudent and necessary. Even when we have had differing opinions regarding the state’s response, our members have worked with your administration behind the scenes to present a united front during one of our state’s most difficult periods.

Today is the 49th day Delawareans are living under the restrictions imposed by your State of Emergency declaration. With the lives and livelihoods of our citizens under threat, we can no longer remain silent.

While COVID-19 poses a significant public health concern, the efforts to curtail its spread have created their own problems that are just as alarming…

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