In The News

How were Delaware businesses deemed essential? Answers unclear as open records law paused

From The News Journal

Walmart is able to sell shoes and clothes at its Delaware stores during the coronavirus pandemic, but shoe and clothing shops cannot.

A Dover hemp store is permitted to remain open and sell cannabidiol, while a nearby competitor – which also sells the marijuana derivative, in addition to pipes and T-shirts – cannot.

And pet stores are open to regular customers while gun shops are seeing customers by appointment only. 

The question of how Delaware deemed specific businesses or industries “essential” during the coronavirus pandemic is being asked by a growing chorus of employees, business owners and customers.

Yet, Gov. John Carney’s administration has not provided clear answers. With Freedom of Information Act requirements rescinded during a state of emergency, the public may not know for a prolonged period of time how the state settled on the economic restrictions.

Responding to a ballooning health crisis last month, Carney declared a state of emergency in Delaware, and with it published a list of industries he would allow to remain open while others would be ordered to close.

On Wednesday, The News Journal sent Carney’s office a list of questions on the topic, including inquiries about specific exceptions to the state’s essential-business list.

In an emailed reply, Carney administration officials repeated past proclamations but did not directly answer each question. The response said the economic restrictions “are intended to prevent a surge in (coronavirus) cases, preserve our hospital capacity and save lives.”

The governor took advice from health experts and agencies outside Delaware while considering which businesses could operate while limiting the spread of the virus, and which products the public needs to be safe, they said in the email.

“The first priority has always been the safety of Delawareans. Within that context, we did our best to balance public health with keeping businesses operating when possible,” the email stated.

Despite the assurances, an outspoken owner of a Dover hemp and smoke shop called the government’s process of deciding essential businesses “arbitrary and unfair.”

https://www.delawareonline.com/story/news/2020/04/13/how-were-some-delaware-businesses-deemed-essential-answers-unclear/2941347001/

COVID-19 Strategic Response Fund announces $350,000 in grants

From Delaware Business Now

In its first round of grants, the Delaware COVID-19 Strategic Response Fund awarded $350,000 to 11 nonprofit organizations providing services to communities throughout the state.

Requests totaled $3.9 million.

The fund is managed by the Delaware Community Foundation. Click here for  further information and to donate.

The grants will address a  range of community needs during the pandemic.

Grants awarded

• • Modern Maturity: $50,000 to deliver additional meals to seniors at their homes.
  • Brandywine Counseling: $25,000 to meet the increased demand for recovery services.

• • Family Counseling of St. Paul: $22,000 to meet the increased demand for family counseling services.
  • Westside Family Healthcare: $50,000 for telehealth equipment to provide care for prenatal and chronically ill patients.
  • YMCA: $50,000 for childcare for essential workers statewide.
  • Easterseals of Delaware & Maryland’s Eastern Shore: $29,000 for telehealth equipment to provide child intervention services.

• • CHILD, Inc: $36,000 to provide housing for battered women and their children, meeting increased demand because of social distancing requirements.
  • CHEER: $38,000 delivering additional meals to seniors at their homes.
  • Housing vouchers for the homeless: $50,000
  • Friendship House for New Castle County – $30,000
  • Community Resource Center for Sussex County – $10,000
  • Catholic Charities for Kent County – $10,000

In this first round, 95 applicants requested a total of $3.9 million. The initial awards represent 23% of the total $1.5 million raised to date for the COVID-19 Strategic Response Fund, which is housed at the Delaware Community Foundation (DCF).

The fund will award an additional $350,000 in grants this week.

The goal is for the fund, which launched March 18, to provide grants for several months, said DCF President and CEO Stuart Comstock-Gay, who chairs the fund’s decision-making council.

Read more:

https://delawarebusinessnow.com/2020/04/covid-19-strategic-response-fund-announces-350000-in-grants/

Delaware businesses look to state government for survival as COVID-19 stifles revenue

From The News Journal

Eric Williams, who runs Mispillion River Brewing in Milford, said he’s lost about 60 percent of its business after the state prohibited dine-ins at food establishments to prevent the spread of coronavirus.

That’s lead him to have to lay off 10 of his 14 workers.

Now, Williams is one in a group of about 200 businesses in the First State who have applied for loans from state government to stay afloat during the during coronavirus shutdown. Half of them have been restaurants, according to the Division of Small Business.

Williams hopes the loans, which Gov. John Carney announced two weeks ago, can help cover his operating expenses and free up money to rehire his workers. The loans were initially created for certain hospitality-related businesses, such as restaurants, hotels and brewpubs.

“If we can save four, five or six people from going on unemployment with the support of our community, then that’s good not just for us … but it is good for our economy,” Williams said.

Carney closed down businesses to try to stop the spread of coronavirus after a March 11 positive test for COVID-19 in a University of Delaware professor. As of Friday, Delaware had 450 positive cases and 14 deaths.

Even though the virus has stopped people from coming in to enjoy a pint, costs such as rent, utilities and the cost of ingredients for beer haven’t gone away. His brewpub is still casing and selling to customers.

“We need to have beer when we open back up,” Williams said. “Especially coming out of a winter, because we’re fairly seasonal.”

Williams said the loans are only a “piece of the puzzle” to help businesses. He asks that Delawareans buy local, get takeout from their favorite restaurants when they don’t feel like cooking, and make sure to practice social distancing wherever you go.

Read more:

https://www.delawareonline.com/story/news/2020/04/06/coronavirus-delaware-businesses-look-state-help-revenue-plummets/5099073002/

Small Business Administration: Mobilization effort underway for CARES Act small business loan program

From Delaware Business Now

The U.S. Small Business Administration and Treasury Department announced what was described as a mobilization  effort of banks and other lending institutions to provide small businesses with capital.

The CARES Act establishes a new $349 billion Paycheck Protection Program. The Program will provide relief to millions of small businesses, a release stated.

“This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single-point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level,” said SBA Administrator Jovita  Carranza. “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees so that they can continue to be the fuel for our nation’s economic engine.”

The new loan program will help small businesses with their payroll and other business operating expenses.

It will provide capital to businesses without collateral requirements, personal guarantees, or SBA fees.

All loan payments will be deferred for six months. The SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.

Visit SBA.gov/Coronavirus for more information on the Paycheck Protection Program.

Read more:

https://delawarebusinessnow.com/2020/04/small-business-administration-mobilization-effort-underway-for-cares-act-small-business-loan-program/

President’s Notebook: Very few businesses have a contingency plan for a pandemic

From the Delaware Business Times

Commentary from Rob Martinelli

These have been the hardest weeks of my business career. I’ve been through the crash of ’87, the dot com bust of 2000, the big recession in ‘08 and ‘09.

Nothing compares to what is going on today.

I’ve put my life into building this business – Today Media – a company of 130 people serving four communities and a robust custom media operation serving many more.

I didn’t have a contingency plan for a pandemic.

On average, companies with fewer than 500 employees have less than a month of cash reserves, according to a study by the JPMorgan Chase Institute. Smaller businesses often have just a couple of weeks’ worth of cash to keep running. Today Media is better prepared than average businesses, but few businesses are adequately prepared for an event of this magnitude.

Thirty percent of Delaware restaurants have chosen to close completely instead of continuing operations focused on takeout and deliveries. More drop daily as carryout fails to sustain operations.

Local hotel occupancies have started to drop below 50% and the stats I am hearing are in the teens. A decline of 15% puts many owners in a cash-flow negative. Many industries face the same bleak picture.

Emergency SBA economic injury loans could play a big role. They offer low interest rates and a 30-year payback. But, getting these loans can take time.

Read more:

https://delawarebusinesstimes.com/news/coronavirus/presidents-notebook-pandemic/

Commentary: Belt tightening in the near future, but not like 2008

From Delaware State News

Commentary from Dr. John Stapleford, Caesar Rodney Institute’s chairman, and past director of the University of Delaware’s Bureau of Economic and Research

There are two views among economists regarding the direction of the U.S. economy. The first anticipates a substantial recession similar to 2008-09.  The second expects a severe dip in the second quarter of 2020 with a steady rebound thereafter. I favor the severe dip scenario.

The 2008-09 recession was prolonged because there were extreme price distortions in residential and capital markets that took time to correct. The wealth effect from stock market losses was compounded by a huge decline in residential housing equity.

The COVID-19 crisis, while painful to many families, will have a temporary sharp impact on the U.S. macro economy. The pandemic measures adopted will fall the most heavily on restaurants, hotels, and airlines. The wealth effect from the losses in the stock market will slow consumer spending in the short term, but the underlying prices and resource markets in the nation are sound and two consecutive quarters of declining GDP is unlikely.

How hard was Delaware hit by the 2008-09 recession? Employment dropped by 50,000 over 20 months, an 11% decline. Total wages and personal income declined for a year with losses of 3-4%, and output fell 6% over five quarters.

Structural changes in Delaware’s economy caused by the 2008-09 recession were profound. As happened following the 1973-75 recession, the 2008-09 recession dramatically altered manufacturing. Over $3.5 billion dollars of annual output was lost from the downsizing of the DuPont Co., Astra Zeneca, and the remaining automobile manufacturing, together with associated wholesale operations.

It took six years for total Delaware employment to recover to its 2008 peak level. And the state’s economy is still struggling. For five months now, based upon its leading economic index for Delaware, the Philadelphia Fed has been forecasting a second quarter 2020 contraction in Delaware’s economy.

Read more:

https://delawarestatenews.net/coronavirus/commentary-belt-tightening-in-the-near-future-but-not-like-2008/

Wilmington proposes business fee hikes amid coronavirus crisis

From The News Journal

Business owners across Wilmington face a hike in their annual license fees, while also facing the challenges of a pandemic.

City officials proposed an ordinance Thursday night to the City Council to raise fees for nearly all kinds of businesses that are licensed to operate in Wilmington, from contractors to financial institutions.

If passed by the City Council, the hike would take effect immediately, according to the legislation.

The proposal has been in the works for months, said John Rago, deputy chief of staff for policy and communications for Mayor Mike Purzycki. The city has not updated its fees in more than 15 years, he said.

The proposal was made separately from Purzycki’s proposed budget for the next fiscal year.

Some Wilmington business owners said the proposal was made with bad timing as bars, hair salons, some retail stores and numerous other nonessential businesses were shuttered either by the governor’s order or economic realities during a nationwide coronavirus outbreak. Restaurants are limited to takeout operations only.

“I’m hanging on off a prayer,” said Abundance Child, owner of the Riverfront vegan eatery Drop Squad Kitchen.

Sales have dropped more than 60% in the past week, she said, and the restaurant is making just enough to still pay staff, rent and utilities.

The city is proposing a more than 50% increase in the license fee, from $181 to $300 for restaurants.

“That’s a lot,” she said. “It’s just poor timing and poor judgment. Why would you have a 50% increase in a time of depression?”

Read more:

https://www.delawareonline.com/story/news/2020/03/27/wilmington-business-owners-face-fee-hikes-amid-coronavirus-crisis/2922379001/

Delaware gives $4.5 million to bring Amazon to former Newport-area auto plant site

From the News Journal

It’s now safe to say that Amazon, with the help of $4.5 million in Delaware taxpayer grants, is coming to the Newport area.

The company, which reported $3.3 billion in profits for the three months that ended in December, says it is bringing about 1,000 full-time jobs to the former General Motors plant site on Boxwood Road.

The state’s seven-person Council on Development Finance approved the grant on Monday.

A Nevada-based distribution company that counts Amazon as a client plans those jobs and more seasonal ones for a 3.7-million-square-foot logistics warehouse, according to a presentation from the company at the Buena Vista conference center in New Castle.

Amazon’s application was not readily available to the public before or during the hearing. Monday’s agenda offered little more detail on the application, only revealing that Amazon was seeking the $4.5 million to “establish its operations in Wilmington, Delaware.”

Read more:

https://www.delawareonline.com/story/news/2020/02/24/delaware-gives-4-5-million-bring-amazon-former-newport-auto-plant/4817576002/

Amazon seeking $4.5 million from state for distribution center

From Delaware Business Now

Amazon plans to seek $4.5 million from the Delaware Strategic Fund for a fulfillment center.

An agenda item from the Delaware Council on Development Finance contained the request from Amazon and listed Wilmington as the location. The council will hold a meeting on Monday.

The Strategic Fund ties assistance from the state to the number of jobs created by the employer. Payback comes from additional income tax revenues.

The council passes its recommendations on to the state’s director of Small Business.

https://delawarebusinessnow.com/2020/02/amazon-seeking-4-5-million-from-state-for-distribution-center/

What does Delaware’s $200 million surplus say about its budget management?

Earlier in 2020, the Delaware Economic and Financial Advisory Council announced revenue projections revealing a $200 million state budget surplus. While some lawmakers see this as an opportunity to fund new projects, political advocacy groups like A Better Delaware, founded by Chris Kenny, are concerned that the surplus is a sign of mismanagement, and are troubled about a lack of voter input into how lawmakers will spend the funds.

Where did the “surplus” come from?

New tax increases over the past few years resulted in over $200 million in additional revenues by raising taxes on corporate franchises, realty transfers, alcohol and cigarettes. The $200 million surplus is being treated as if it came from better fiscal policy, but A Better Delaware argues that it’s a sign that the state is overtaxing Delawareans.

Delaware’s portion of income that goes to state and local taxes is 10.2%, above the national average. Delaware taxes can also be difficult for businesses; not only do they have high corporate income taxes of 8.7%, but they’re also one of only six states to impose a gross receipts tax. Even so, lawmakers continue to propose and pass new taxes, despite these already high tax rates and the fact that they don’t seem to need the additional revenue if they’re collecting in excess of their budget.

A Better Delaware, therefore, wants taxpayers to know that they have been “overcharged.” Tax increases enable the government to authorize additional spending, when many people feel that they’re paying too much in taxes already.

What will happen to surplus funds?

When the “surplus” was announced, the initial plan was to wait for a final projection in June from the Economic and Financial Advisory Council in order to accurately disperse the funds. Shortly after the announcement, though, nearly all of the $200 million was promised to various projects at the call of Dover politicians.

House Minority Leader Danny Short, R-Seaford, cautioned that all new spending proposals be “scrutinized completely.” Unfortunately, says A Better Delaware, it appears that this won’t be the case and that voters won’t get a say in how the state spends the additional funds. The new proposed spending has been raised with minimal transparency or public input into how to remedy the situation. It also appears that a refund to taxpayers is not being considered as an option.

Building on a concerning past precedent

This isn’t the first time that Delaware is dealing with an unexpected surplus. Last year, Rep. John Kowalko, D-Newark, criticized another surplus issue resulting from excess charter school transportation funds, saying that letting charter schools keep the excess funds without further scrutiny was the wrong move, as it gave “no oversight and no accountability to the taxpayers or anyone else” and that the move was “a shocking display of disregard for taxpayer money.”

The same objections can easily be applied to the current $200 million in additional revenue from over-taxing, A Better Delaware says. That’s because once again, the state’s inaccurate budgeting means that taxpayers’ hard-earned funds will go to projects that weren’t designated as part of the initially agreed-upon budget.

How do Delaware taxes compare?¹

• Delaware has the 9th highest combined corporate tax rate
• Delaware ranks 41st for personal income taxes
• Delaware has one of the highest real estate transfer taxes in the nation
• Delaware is one of only 5 states to still have a gross receipts tax

How can taxpayers object to the current budget situation? 

While funding key projects is important, A Better Delaware believes taxpayers should be concerned by the manner in which the state currently managing its budget and the general lack of accountability to voters. Given the group’s claims of mismanagement, A Better Delaware argues that excess funds would be better off back in the hands of the state’s taxpayers.

Delaware residents that want to object to register their objections to spending the budget surplus can call their legislators. Additionally, to prevent similar issues in the future, voters can call their legislators any time a new tax is on the table and demand better scrutiny by the Joint Finance Committee in budgeting.

The Joint Finance Committee will be meeting during February. Find the JFC public hearing schedule here.

Joint Finance Committee:

Chair:

• Harris B. McDowell (302)-744-4147

Co-Chair:

• Quinton Johnson (302)-744-4351

Senators:

• Bruce C. Ennis (302)-744-4310
• Trey Charles Paradee (302)-744-4286
• Laura Sturgeon (302)-744-4286
• Dave G. Lawson (302)-744-4237
• Bryant L. Richardson (302)-744-4298

Representatives:

• William J. Carson (302)-744-4193
• Stephanie T. Bolden (302)-744-4378
• Earl G. Jaques (302)-744-4351
• Ruth Briggs King (302)-856-2772
• Kevin S Hensley (302)-218-0130

(1) Sources:

• https://files.taxfoundation.org/20200212173210/Facts-Figures-2020.pdf
• https://www.nar.realtor/smart_growth.nsf/docfiles/TransferTaxRates(8-05).pdf/$FILE/TransferTaxRates(8-05).pdf
• https://taxfoundation.org/gross-receipts-tax/