In The News

Committee approves capital bond bill totaling $708 million, down 18% from this year

From Delaware State News

DOVER — Lawmakers completed drafting the capital bond bill Thursday, setting it up to be voted on by the full General Assembly next week. The committee approved a $708 million spending plan for the fiscal year beginning July 1.

That total represents a decline of about $155 million (18%) from the current fiscal year and $185 million (21%) from the governor’s January proposal, a precipitous decrease that can be clearly backed to the COVID-19 outbreak.

With coronavirus triggering a big economic hit and preventing the legislature from meeting at all for months, lawmakers were pressed to approve spending plans for the operating and capital budgets by their deadline at the end of this month.

The Joint Committee on Capital Improvement, one of two money committees that handles the annual spending bills, did the latter Thursday by passing a modified bill that closes the gap with cuts to various areas. The cuts themselves were identified beforehand by budget officials in consultation with the committee co-chairs and some others.

The bond bill, which still must be passed by both chambers by July 1, includes $364 million for transportation-related items and $344 million for other needs, such as state facilities.

The $893 million sum proposed by the governor would have been the largest bond bill in state history, surpassing the $863 million total allocated in the current fiscal year.

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Record unemployment rate in Delaware gets even higher

From Delaware State News

DOVER — Delaware’s April unemployment rate shattered the old record. Its mark for May is even higher.

The state’s unemployment rate climbed 14.9% to 15.8% from April to May, an indication of just how far from over the COVID crisis is. Nearly one in six Delaware workers did not have a job last month, according to the data.

Out of the estimated civilian labor force of almost 473,000 Delawareans, about 75,000 were not employed in May, according to data from the Delaware Department of Labor and U.S. Bureau of Labor Statistics.

The unemployment rate rose from 3.9% in February to 5.1% in March, the largest month-to-month increase since September 1990, before April’s astronomical climb.

Delaware’s first coronavirus case was announced March 11, and businesses were under serious restrictions by the end of the month, while residents were urged to remain at home.

Nationally, the unemployment rate actually fell in May, declining from 14.7% to 13.3%. Still, 13.3% is the highest the rate has been since the Great Depression, and the Federal Reserve this month predicted unemployment will be around 9% at the end of the year.

For comparison, the unemployment rates for May 2019 were 3.6% nationally and 3.7% locally.

Delaware’s unemployment record before COVID was 9.8%, set in 1976, the first year job records for the state are available. During the Great Recession, the First State’s nadir was 8.8%.

The May unemployment rates for New Castle, Kent and Sussex counties, respectively, are 14.9%, 17% and 16%. However, unlike the state rate, the county figures are not seasonally adjusted.

Over the past 12 months, Delaware has lost almost 73,000 jobs, with about 41% of the losses in leisure and hospitality.

The state has seen in excess of 100,000 unemployment claims in three months, more than triple the number from all of 2019.

Delaware is currently in the second phase of its three-part “rolling” economic recovery. There’s no timetable for when the next step will begin.

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Reopening Phase Two begins Monday: Increased capacities, larger gatherings allowed

From Delaware State News

DOVER — Certain businesses can begin to increase capacity and larger public gatherings will be allowed starting at 8 a.m. today as Delaware enters the second phase of its reopening plan from the shutdown imposed to help limit the spread of the COVID-19 pandemic.

Locations that operated at 30% of fire occupancy requirements for Phase One, can move to 60% of fire occupancy requirements (excluding staff). The indoor gathering limit is raised to 50 people and fully unenclosed outdoor gatherings of up to 250 people are permitted if public health precautions are in place.

However, exercise facilities and personal care services such as hair care, tanning, tattoo, massage therapy services, nail care, brow care, spas, waxing services and similar services are required to remain at 30% of fire occupancy requirements.

Cloth face coverings must still be worn in accordance with the State of Emergency Order and social distancing must still be observed at all gatherings.

Gov. John Carney emphasized during his press conference on Friday how important it is to still wear masks as Delaware reopens. He pointed to 12 states that have seen sharp increases in COVID-19 cases after reopening Memorial Day weekend.

Gov. Carney said a rebound in COVID-19 cases would be the worst possible situation for the state and urged residents to not get complacent and keep observing the guidelines to help prevent the spread, calling this time “the new normal” until there’s a vaccine or effective treatment.

“What we do know, as we move forward, it (a face covering) will be helpful in maintaining the health of the community,” Gov. Carney said.

“The virus has not gone away,” he added. “The virus has opportunities to spread with people not using the precautions in terms of social distancing and mask-wearing.”

Businesses and locations allowed to increase capacity to 60% are: casinos, food and drink establishments, houses of worships, commercial lodging establishments, arts and culture centers, malls, retail stores and community pools.

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Republicans blast Carney for handling of COVID crisis, insist state should move on

DOVER — A handful of Republican lawmakers lambasted Gov. John Carney and the state’s approach to COVID-19 Friday, claiming his policies have left citizens removed from government, created a “culture of fear” and represent “the biggest source of the transfer of wealth … from Main Street to Wall Street” since at least the early 1980s.

Speaking at the Central Delaware Chamber of Commerce’s annual legislative luncheon, five Republicans from Kent or northern Sussex counties argued the government’s approach to the coronavirus outbreak has devastated the state’s economy, which could have been avoided. Furthermore, they claimed, the governor has acted almost like a dictator at times, disregarding legislative input and ruling with an overly heavy hand by executive order.

“It has not been a republic for three months,” Rep. Jeff Spiegelman, R-Clayton, said.

He said Republican complaints, suggestions and inquiries have been ignored, noting he’s learned of new policies from lobbyists.

Delaware has been in a state of emergency for three months, with most businesses being shut down in March after the first confirmed coronavirus case here. The state has begun slowly lifting restrictions, but it’s not enough for some people, who insist the time has come to return to normalcy.

Last month, 15 of the General Assembly’s 24 Republican lawmakers sent a letter to Gov. Carney urging him to lift limitations and open the state almost immediately. Three of the legislators who signed onto that letter also sent a message to U.S. Attorney General William Barr asking him to investigate “broad, unconstitutional overreaching by the governor of Delaware and the wholesale violation of the important rights guaranteed” to every American.

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Delaware to borrow hundreds of millions for jobless benefits

DOVER, Del. (AP) — Delaware officials plan to borrow hundreds of millions of dollars from the federal government to pay benefits on an avalanche of coronavirus-related unemployment claims and replenish the state’s depleted unemployment insurance trust fund.

Department of Labor officials said Thursday that the trust fund, which had a balance of $165 million before Gov. John Carney shut down businesses in March in an effort to stem the spread of the virus, will be depleted by mid-July.

Officials have submitted an initial request for $196 million to cover payments through August, and are expecting to borrow another $150 million in the fourth quarter.

“As soon as we get that money it goes out the door,” said state Labor Secretary Cerron Cade.

State officials currently estimate that roughly $530 million will be needed to pay benefits through the end of the year and restore the trust fund to its pre-emergency level.

The federal government’s coronavirus response package includes a provision allowing states to borrow money at zero interest for the rest of the year to cover unemployment benefit costs, as long as the loans are paid back by the end of the year. Remaining balances and any future loans would be subject to interest payments, although states are hoping that federal officials extend the interest-free provisions — or forgive the loans entirely.

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Delaware keeps top bond ratings and saves $5M in refinancing

WILMINGTON – The state’s top bond ratings were recently reaffirmed by three of the four rating agencies, as it also refinanced bonds to save on a lower interest rate.

State finance officials reported that $33.1 million in general obligation (GO) bonds were refinanced at a record low interest rate of 0.79%, saving the state $5.2 million over the bonds’ decade-long term. The savings were structured to help the state address the fiscal year 2021 budget challenges brought on by the COVID-19 pandemic and the state-mandated shutdown of commerce to stem its transmission.

Fitch, Moody’s and KRBA all reaffirmed Delaware’s Triple A rating in June reviews – Standard & Poor’s did not review the 2020B GO bond offering, which refunded old debt at the new lower rate – and credited the state with preparing for economic downturns through building reserves. All four agencies had last evaluated the state’s financial position in January, before the pandemic began.

In a statement announcing the reaffirmed ratings, Gov. John Carney said, “The COVID-19 emergency presents enormous financial challenges for every state, including Delaware. But I think all Delawareans can be proud of the work we’ve done with the General Assembly to boost the state’s finances prior to this unanticipated event, so our state is better prepared to weather the storm.”

Delaware Finance Secretary Rick Geisenberger added that the state’s refunding “shows the market’s confidence in Delaware despite the near-term challenges faced by every state.”

The agencies all highlighted the state’s budget cushions, including its $252 million reserve “rainy day” account and its $126.3 million Budget Stabilization Fund, as a big reason for its top ratings. They also complimented the state’s use of the independent, non-partisan Delaware Economic and Financial Advisory Council (DEFAC) to forecast revenue estimates.

The reviews did warn the state about drawing too much upon its reserves to help plug deficits in the FY 2021 budget though.

“Prudent use of reserves is anticipated, but a sustained deterioration in reserve levels would be a credit negative,” KBRA wrote in its review.

The General Assembly’s Joint Finance Committee recently reviewed a revised budget proposal from Carney’s administration that sought to utilize $76.3 million from the Budget Stabilization Fund, which was created under Carney’s tenure to plug smaller budgetary gaps through an annual savings program. The proposal does not use any of the state’s reserve fund, which is filled by unspent funds each year and capped at 5% of state revenue. States typically try to leave such savings funds untouched to boost credit ratings, and Delaware has never drawn from the reserve account since it was created in 1980.

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Businesses Begin Slow Process of Reopening

White lines now block off socially distant personal workout space inside Legion Transformation Center in Middletown where coaches have eagerly awaited news of Delaware’s plan to reopen businesses.

The COVID-19 pandemic led to the gym’s physical closure along with businesses throughout the state when Governor John Carney announced a state of emergency and a stay-at-home order back in March.

In spite of the uncertainty surrounding the pandemic, coaches and General Manager Frank Purfield remained dedicated to their motivated members who did not want to lose out on the workouts they have come to love. They created online content to stay engaged with their membership, not knowing where the future might lead the business.

“We have a lot of content online for our members to continue to use. I think we had about 20 percent of our members at Middletown put their accounts on hold [during the pandemic], so obviously that hurt us a little bit. But we had a lot of people who, once they realized we had online stuff, pulled their account out of a frozen status. Right now, we have quite a few members that work out at home for now until they are more comfortable,” Purfield said.

The gym, like other exercise facilities, reopened in early June at 30% of its fire code occupancy rate per phase one of Delaware’s Economic Reopening Plan released by Gov. Carney. Phase one also eliminated the out-of-state quarantine and concerns with short-term rentals.

This week, he released phase two set to begin Monday, June 15, emphasizing that the public must remain cautious moving forward through the reopening process.

“As businesses reopen and more Delawareans head back to work, it’s important to remember that COVID-19 is still active in Delaware,” said Governor Carney. “Delawareans need to remain vigilant. Keep distance from others outside your household. Wash and sanitize your hands frequently. Wear a face covering in public settings, and act with a sense of community. This pandemic is not over. Now’s not the time to let up.”

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Delaware cites system error amid prolonged wait for Pandemic Unemployment Assistance

Many Delawareans are still waiting for unemployment benefits following confusion over a system error for self-employed and independent contractors who are out of work due to coronavirus, according to the Delaware Department of Labor.

The announcement refers to unemployed residents who filed for Pandemic Unemployment Assistance, which in Delaware was launched in May thanks to the federal stimulus package passed by Congress.

After going weeks without benefits, most of those claimants still haven’t been paid and have been confused by the department’s handling of their payments. Claimants watched their claims go from being erroneously marked as “processed” to not processed. The system marked “far more claims as processed than had been reviewed and approved by staff,” according to a Wednesday morning Facebook post from the department.

“As a result of this system error, the online view for many claimants was changed to show a payment was going to be made,” the post says. “We corrected this problem and as a result, the ‘Processed’ status was reversed for claims which had not yet been approved for payment.”

Those claimants already had to wait several weeks longer than other unemployed Delawareans, who have been able to apply for benefits due to coronavirus in mid-March, because the department was waiting for guidance from the federal government on how to roll out this program, according to Labor Secretary Cerron Cade.

Since the program launched on May 16, more than 6,000 claims have been filed that would lead to more than $14 million in benefits, according to a Friday news release from the department. That’s about 6 percent of the total number of people who have filed for unemployment.

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A sad farewell: Delaware restaurants and cafes closed for good due to the coronavirus

Delaware restaurant dining rooms, closed since March 16 because of the coronavirus, were allowed to reopen on a limited basis on June 1.

But the loss of revenue for the past 10 weeks apparently has been too devastating for some operations.

The Delaware Restaurant Association predicted that 20 to 30 percent of restaurants in the state would likely close permanently because they could not overcome financial hardships.

EDITOR’S NOTE: This list was updated June 18.

Here are some restaurants and cafes that are going out of business:

Nal Restaurant in Hockessin

Owners Ruben and Miriam Peregina had grand hopes of bringing foods from Brazil, Peru, Argentina and their native Mexico to their new restaurant in Hockessin when they opened two years ago.

The dinner-only restaurant at 1304 Old Lancaster Pike, across from the Wawa store, was named Nal after the Mayan god of maize (corn).

The pair, first-time restaurateurs, renovated a former barbershop into a sophisticated, minimalist 40-seat eatery.

On Thursday, the couple announced the restaurant was permanently closing “after a deep evaluation of our current situation and the near-term economic outlook.”

The Pereginas thanked customers for their support in a note posted on therestaurant’s Facebook page.

Half Baked Patisserie in Middletown

A Facebook post on June 8 said the business at 13 W. Main St. was closing after eight years. “It’s no secret that being a small business owner comes with endless challenges. There are battles we have won, and some we have lost,” the post read. “The time has come that we will lock our storefront up for the last time and focus on what matters most, our family.”

Last day of business is June 10. Owners said “all pre-existing confirmed orders will be honored. “

JB Dawson’s at the Christiana Mall

The restaurant at the mall, operating for the past 10 years, announced June 4 that it would not be reopening. It has been closed since March.

A Facebook post read:

 “It is with heavy heart to tell all of our loyal customers of our Christiana Mall JBD’s that we will not be re-opening this location. We had a great 10 years but we will not be renewing our lease.

We are sorry to disappoint of our wonderful customers but with Covid-19 we had to make this very difficult decision.

Sincerely,

J.B. Dawson’s Staff

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Keep Sussex Strong looks to bolster local economy

Bill Clifton, executive chef and co-owner of The Counting House restaurant in Georgetown, keeps his spending dollar local when he can.

“It can be hard when you’re buying something like televisions. But I don’t buy from chain restaurants or fast food,” he said. “See, my family had the cannery in Milton, so everyone would come in at one time. Everyone knew my family, and my family would know everyone. I like to keep that connection.”

Now Clifton is sharing that drive to support small businesses in his home county with the “Keep Sussex Strong” advertising campaign created by the Sussex County Economic Development and Southern Delaware Tourism. He’s one of 14 business owners, ranging across different industries across Sussex County, featured at work and stressing the need for customers to shop locally.

“If you want to improve your local economy, you need to shop here,” Clifton said. “The money stays here. They pay taxes in your town and county. They help out your local charities and churches. They know what it means to be part of the community.”

Three commercials produced by W. Films will air on regional television and on social media throughout the month. Sussex County Economic Development spent $40,749 on the campaign.

Now that Delaware is taking the first steps in reopening, the goal is to inspire residents and visitors to spend money at small businesses where it is needed the most, said Sussex County Economic Development Director Bill Pfaff.

“We need to put customers on high alert that now more than ever, local businesses need them. They have been shut down or on part-time. We need to keep them alive,” Pfaff told the Delaware Business Times. “Without our local businesses, we would not exist.”

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